A new coarse-mesh computational method for the numerical solution of heat conduction and fluid flow problems is formally developed and applied to sample problems. The method is based upon formal use of Green's functions, which are defined locally over subdomains of the original system under consideration. The formal development of the local Green's function method for the solution of heat conduction problems is presented and discussed. Numerical solutions of sample problems for one-dimensional heat conduction with constant thermal conductivity, one-dimensional heat conduction with temperature-dependent thermal conductivity, and two-dimensional heat conduction with constant thermal conductivity are given, and these results are compared with results obtained using the finite difference and finite element methods. The formal development of the local Green's function method for the solution of fluid flow problems is then also presented and discussed; the numerical solution of a sample problem for simple one-dimensional incompressible fluid flow with viscous heating is also given.