The present study investigates whether, why, and how diversity affects the creative capacity of cities and regions, under which conditions diversity can be the source of urban and regional competitive advantage in knowledge intensive activities and what are the key assets, infrastructure, and policy tools required to foster the development of creative, competitive and cohesive places. Diversity and creativity are complex and multi-faceted issues and to understand their roles and effects requires contributions from various social sciences. Therefore, the study examines the dynamics of diversity and creativity at different levels from individual to group and society, at different scales from team or organization to cities and regions, and from different perspectives including the disciplines of psychology, sociology and economics. While underlying the interconnection between diversity and creativity, the study specifically focuses on the direct economic, social and spatial implications of diversity and creativity in cities and regions. Why some places (cities and regions) are more attractive than some others for diverse and creative people and innovative and creative activities? The paper aims to put current debates about diversity and creative cities in context and perspective. The discussion considers the policy roadmap to the creative city and challenges for governments.