Abstract: The subject of this research is the shift in the role of cities in postindustrial era. The author believes that the cities experience inner transformation losing the traditional functionality, generated by the industrial era. Most importantly, city ceases to be a confined “place” with internal structure and differentiation based on the industrial production. It is state that the cities, which existed as industrial centers due to the industrial revolution, have depleted their development potential. This leads to the emergence of cities that lose their urban concept, becoming the urban spaces with the open and constantly expanding boundaries. The research is conducted on the basis of structural-functional analysis, comparing the functionality of industrial cities with the modern megacities. The author comes to a conclusion that city as an industrial project has exhausted itself. The largest cities become the centers of postindustrial world, holding a special place in the “flow” of commodities, workforce, capitals, and information. The development of a modern city leads to the long-term social and political changes. An industrial city in its classical type pales into periphery of social development and turns into a “suburb” of postindustrial society.