Cities have always been the driving forces of economic and social development, which is why urban agglomerations play an important role in territorial development. Urban agglomerations are densely populated areas, in which a large number of enterprises and residents are concentrated, making them a stimulating environment for economic and entrepreneurial activities, creation of various clusters, research, innovation and commercialization of ideas into goods and services that have value and can be traded at the market. With the creation of ESIF funds for 2014.-2020. period, European Union has created a special mechanism for financing development projects in cities and their wider urban areas. ITI mechanism is a new mechanism, established with an aim to stimulate urban development of european cities, through a system that is based on a partnership between different levels of government authority, the urban population, bussines sector, the academia and non-profit sector. Through ITI mechanism, each Member State has, at its disposal, a certain amount of financial funds intended for investments in specific urban development projects. With that in mind, Republic of Croatia, which has established seven urban agglomerations has more than 200 million euros at its disposal for specific ITI projects. This paper examines the phenomenon of urban agglomerations, with emphasis on the possibilities of financing their development throughtout the use of ITI mechanisms and the analysis of their development characteristics and the implementation of ITI mechanisms.