The emergence of long-context language models with context windows extending to millions of tokens has created new opportunities for sophisticated code understanding and software development evaluation. We propose LoCoBench, a comprehensive benchmark specifically designed to evaluate long-context LLMs in realistic, complex software development scenarios. Unlike existing code evaluation benchmarks that focus on single-function completion or short-context tasks, LoCoBench addresses the critical evaluation gap for long-context capabilities that require understanding entire codebases, reasoning across multiple files, and maintaining architectural consistency across large-scale software systems. Our benchmark provides 8,000 evaluation scenarios systematically generated across 10 programming languages, with context lengths spanning 10K to 1M tokens, a 100x variation that enables precise assessment of long-context performance degradation in realistic software development settings. LoCoBench introduces 8 task categories that capture essential long-context capabilities: architectural understanding, cross-file refactoring, multi-session development, bug investigation, feature implementation, code comprehension, integration testing, and security analysis. Through a 5-phase pipeline, we create diverse, high-quality scenarios that challenge LLMs to reason about complex codebases at unprecedented scale. We introduce a comprehensive evaluation framework with 17 metrics across 4 dimensions, including 8 new evaluation metrics, combined in a LoCoBench Score (LCBS). Our evaluation of state-of-the-art long-context models reveals substantial performance gaps, demonstrating that long-context understanding in complex software development represents a significant unsolved challenge that demands more attention. LoCoBench is released at: https://github.com/SalesforceAIResearch/LoCoBench.