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This article describes a modernization project undertaken by a nationally accredited Russian university located in Omsk, Siberia, and aimed at developing a new international business school. A unique feature of the project is that it was successfully implemented in a former Soviet-era closed city. Until 1991, the university hadn't had any international connections and for both local faculty and administrators the concept of international business education was a radical new idea; therefore, the project development team needed to develop the project "from scratch" in an unfavorable environment. The paper describes the process of organizational innovation where gradual modernization was intertwined with radical innovations some of which were fiercely opposed by hardliners and bureaucrats. The paper reveals the need for the project, describes the process of its development, identifies major steps in implementation, explores its design, characterizes curriculum-related problems and innovations, evaluates available resources for internationalization of the school's faculty and students, identifies roles played by various stakeholders, evaluates key success factors and provides recommendations for future research.