The work aims at understanding how smaller cities use culture and creativity (C&C) as a tool for local economic development. The study seeks to contribute to filling the gap in research on ways of inscribing C&C into the context of smaller cities’ development. It studies and systematises different theories and discourses on the role of C&C in territorial development, elaborating an analytical model (typology) for analysing the multiplicity of approaches to C&C-led local development. On the basis of this analytical model, it studies what are C&C-led approaches pursued in practice, relying on two distinct types of empirical analysis. The first one (a broad survey) identifies and analyses 30 cases belonging to different conceptual categories of C&C-led approaches and, generalising the results of case-by-case studies, discusses the practical manifestations of pursuing the different types of C&C-led approaches. The second one (an in-depth case study) seeks to understand how the different approaches interact within the C&C-led policy of one town. It studies the C&C-led strategy of the Portuguese town Óbidos, which combines features of all the categories of C&C-led approaches, and analyses their elements and synergies. The work thus demonstrates and discusses the variety of ways in which smaller cities use C&C as an instrument for local development.