The authors present an overview about small towns’ urbanisation in Hungary. Following the specific aspects and factors of their urbanisation in the last centuries, the authors conclude that 20 years after the political and economic transition, small towns arrived at a crossroads in their development. Suffering the effects of demographic change and an outflow of young adults, almost every typical, traditional small town has been shrinking since at least the last decade. This crisis is more intensive than the overall decrease of the population number in Hungary. Only atypical small towns have been able to increase their population. Behind the crisis of typical small towns, the paper defines some possible factors, including the delayed effects of transition, the re-evaluation of small towns in the globalising, network-based economy and the actual reduction of the state’s spatial functions and presence. Although some niche-based strategies are open for success, for the majority of small towns the question still remains open: what new functions and attributes could make them attractive and successful in the 21st century?