Throughout the history of urban forms, major urban design schemes and avant-garde design of space have been mostly an outcome of economic growth of cities and countries. Marking the era of globalization, a reverse procedure has taken place in the last decade or so; urban design appears to be consciously ‘used’ as a means of economic development of cities in the new competitive milieu. This paper seeks to investigate the new role of urban design in the framework of contemporary development of European cities, in relation to their development potentials and constraints within the European urban system as a whole. It attempts to examine the potential of urban design for different classes and groups of European cities: metropolitan cities, larger cities and smaller cities, as well as cities in the core and cities in the periphery of Europe (geographical and/or economic). It is argued that urban design is an emerging new factor affecting development prospects in all classes and groups of European cities, while it becomes particularly crucial for two classes of cities, representing the opposite extremes of the European urban system: metropolitan cities and smaller peripheral cities without indigenous resources for development.