This paper examines change in the economic functions of Australia's regional cities and the relationship between industry structure and growth rates. It considers the role of regional cities within the national economy and suggests that they are becoming a more significant part of the national urban system. Labour force and population data indicate that while regional cities are growing more quickly than Australia as a whole, there are substantial variations between cities. The paper goes on to discuss functional classifications of Australia's regional cities based on the 1961,1976 and 1991 Censuses and highlight the emergence of new functions over this period. It is argued that while the highest rates of growth have occurred amongst cities with economies founded on tourism, retirement and recreation, development has not been limited to these centres. The paper also considers the reasons why this research presents a picture of change within the urban system that is at odds with the views of other writers.