Globalization and urban development have prompted the growth of some cities, while many medium - sized and small cities have remained neglected. Such urban system with the dominant city (usually the capital city) creates the polarisation in development. Such trends of regional inequalities have become a constant pressing issue. In the creation of the regional policies, it is very important to know how to overcome such differences. In order to diminish regional inequalities, today’s society places great emphasis on the polycentric urban development. The aim of this thesis is to define and present the importance of polycentricity in encouraging the more balanced development, on European level and with more detailed analysis in Croatia and in chosen county. After the introduction, the paper defines the city and describes urban growth, different urban forms, urban functions, decentralisation of the functions, explains the characteristics of the polycentricity (polycentricity as economic and geographic phenomena, costs and benefits of polycentricity). Special chapter is directed at the role of polycentricity in the development of the European regions and in the following chapter more detailed analysis of the chosen characteristics of the polycentricity in Croatia, with the example of Istria county and in Municipality of Lanišće is given. In order to provide more complete conclusions separate analysis is performed. In the last parts of the thesis the results of the interview with the representatives of the chosen country and municipality are presented, overview on the investigation is given as well as conclusion. In this thesis it is confirmed that polycentric development can help to use the potentials and can represent an incentive for the development, that is to foster local and regional development. It enables better interaction between cities and municipalities. Instruments of the European Union's cohesion policy provide additional opportunity for the faster connections of the surrounding areas, as well as to achieve integrated development.