We study Morita equivalence and Morita duality for rings with local units. We extend the Auslanders results on the theory of Morita equivalence and the Azumaya-Morita duality theorem to rings with local units. As a consequence, we give a version of Morita theorem and Azumaya-Morita duality theorem over rings with local units in terms of their full subcategory of finitely generated projective unitary modules and full subcategory of finitely generated injective unitary modules.