We show that if E is an arbitrary acyclic graph then the Leavitt path algebra LK(E) is locally K-matricial; that is, LK(E) is the direct union of subalgebras, each isomorphic to a finite direct sum of finite matrix rings over the fieldK. As a consequence we get our main result, in which we show that the following conditions are equivalent for an arbitrary graph E: (1) LK (E) is von Neumann regu...