Since the beginning of transition, interregional disparities in Central and Eastern European Countries (CEECs) have increased. Particularly, the differences between urban and rural areas have grown. This paper traces the development of these disparities and discusses, based on theoretical considerations and political objectives, the need for and the design of regional policy measures. For rural development in the new EU member states, institution building, competitiveness of the agri-food sector, non-farm income sources and labour mobility are crucial. These measures should be adapted to the specific characteristics of the respective areas. Since the end of the 1990's, the efforts of regional policy in the CEECs were highly influenced by the preparation for EU-accession. The SAPARD programme has strengthened institutional mechanisms and capacity building. Nevertheless, there remain important challenges in this field.