This review of regional policy in Sweden finds that Sweden has recently renewed focus on promoting development opportunities in all regions and has introduced a gradual regionalisation process with a strong bottom-up approach. Yet challenges remain, particularly concerning knowledge diffusion and urban-rural linkages. Further efforts to achieve critical mass and improve co‑ordination can help better address local needs. This Review explores the potential for enhanced innovation and entrepreneurship in both urban and rural areas and provides recommendations to strengthen Sweden’s regional development strategies through improved governance mechanisms, both regionally and across levels of government.