The system of church government in which final ecclesiastical authority rests with the local congregation as a whole, not with a bishop, a presbytery, or a denominational hierarchy. Baptists, Independents/Congregationalists, most Bible churches, and some Free Churches hold this polity. Within congregationalism, most churches are still led by a plurality of elders/pastors on a day-to-day basis — but the congregation as a whole has the final say on major matters: calling a pastor, removing a pastor, admitting members, removing members (discipline), and adopting the church's confession of faith or constitution.
The congregational case is biblical in three respects. (1) The NT addresses churches as congregations — Paul writes "to all God's beloved in Rome, called to be saints" (Romans 1:7), not to the bishop or presbytery; his instructions assume the whole church is responsible for their collective life. (2) Key ecclesiastical acts are assigned to the whole church: the final step of church discipline is "tell it to the church" (Matthew 18:17 — not "tell it to the elders"); at Antioch the whole church sent Paul and Barnabas (Acts 13:1-3); at Corinth the church as a whole is commanded to remove the incestuous man (1 Corinthians 5:4-5, "when you are assembled"); the Jerusalem Council's decision was approved by "the whole church" (Acts 15:22). (3) The priesthood of all believers undergirds the principle — every member has the Spirit, every member has responsibility, every member is accountable. Potential pitfalls of congregationalism are real: majority rule can become mob rule; untrained members can make foolish decisions; conflict can paralyze. These are real risks but not reasons to transfer final authority to a hierarchy. The answer is careful eldership within congregationalism: elders lead, teach, and govern day-to-day; the congregation preserves final ownership of the church they are Christ's body in.