After last several decades in the area of European Union and major changes that happened on the global scale caused by accelerated technological growth and socio - social progress that had a significant impact on the liveability and the social standard of especially rural areas that have experienced the real process of degradation of space and depopulation caused by migration of the population towards urban areas over recent years a major part of the European Union's policy is aimed at re-revitalizing and developing these areas in order to create conditions for the return of the population in the direction of them. The paper includes sustainable development of rural areas of the European Union, the Republic of Croatia, selected features of the economy of the City of Vodnjan - Dignano and analysis of empirical research that included the possibility of sustainable development and revitalization of the City of Vodnjan - Dignano through participatory involvement. This research has shown that in the area of the City of Vodnjan - Dignano, which has been exposed to such a process of degradation and depopulation in its history, exist excellent preconditions for the return of the population and revitalization of the area. While a certain level of public services is at a satisfactory level there are certain parts of it that is necessary to improve in order to meet the needs of the local population. At the same time, there is the will of the local community to engage in processes of participation and decision-making in the direction of future development. The results of the conducted research can be used for future analyzes of the development of Strategies and plans, as well as participatory involvement of stakeholders in other research. Therefore, only by the common synergy of local self-government and the local community there can be recognized the needs and priorities and the potential for future development of the Town of Vodnjan - Dignano.