The development of cross-border cooperation in the European Union requires the refinement of organisational and legal instruments which support the cooperation of the local and regional authorities in neighbouring border regions. One such instrument may be the Cross-Border Functional Area (CFA). The authors of the article were in charge of the implementation of a pioneering project commissioned by Directorate-General for Regional and Urban Policy (European Commission) to establish the first CFA in Europe in the Polish-Lithuanian border region. It was formed by nine cities and communes (Pol. gmina) from Sejny and Suwałki counties and three Lithuanian local authorities: Lazdijai, Vilkaviškis and Kalvarija. The main objective of the article is to identify the qualities of a CFA as an organisational and legal instrument supporting the development of cross-border cooperation. An additional objective is to identify the key organisational and legal determinants of the development of the CFA in the Polish-Lithuanian border region. The article has a scientific and research character. It characterises CFAs in relation to other forms of institutional cross-border cooperation, discusses the legal basis for the establishment of a CFA, presents the organisational structure and identifies the key stakeholders. The lack of a legal definition of a CFA makes its use difficult, but not impossible. The importance of functional connections in cross-border cooperation in the EU is sufficiently significant to warrant further research on the institutionalisation of cooperation within cross-border functional areas.