Localized large-amplitude Rossby wave phenomena are often associated with adverse weather conditions in the midlatitudes. There has yet been a wave theory that can connect the evolution of extreme weather anomalies with the governing dynamical processes. This thesis provides a quasi-geostrophic framework for understanding the interaction between large-amplitude Rossby waves and the zonal flow on regional scales. ,Central to the theory is finite-amplitude local wave activity (LWA), a longitude-dependent measure of amplitude and pseudomomentum density of Rossby waves, as a generalization of the finite-amplitude Rossby wave activity (FAWA) developed by Nakamura and collaborators. The budget of LWA preserves the familiar structure of the Transformed Eulerian Mean (TEM) formalism, and it is more succinct and interpretable compared with other existing wave metrics. LWA also captures individual large-amplitude events more faithfully than most other detection methods. ,The bulk of the thesis concerns how the budget of wave activity may be closed with data when Rossby waves attain large amplitude and break, and how one interprets the budget. This includes the FAWA budget in a numerical simulation of barotropic decay on a sphere and the column budget of LWA in the storm track regions of the winter Northern Hemisphere with reanalysis data. The latter reveals subtle differences in the budget components between the Pacific and Atlantic storm tracks. Spectral analysis of the LWA budget also reveals the importance of the zonal LWA flux convergence and nonconservative LWA sources in synoptic- to intraseasonal timescales. ,The thesis concludes by introducing a promising recent development on the mechanistic understanding of the onset of atmospheric blocking using the LWA framework.