The competition between cities involves the search for different ways and means to create, attract, sustain, and use diverse resources, knowledge, ideas, and innovations to support the economic growth of each individual city and, as a result, to strengthen the city’s position in the urban hierarchy both short-term and long-term. However, for each city, urbanisation does not only mean an increase in competitive economic power but also a number of problems such as pollution, poverty, crime and unemployment. In order to address the challenges posed by the urbanisation processes, the United Nations World Commission on Environment and Development (WCED) issued the 1987 Report that emphasised the need for sustainable socio-economic development that would also consider ecological factors. Given this, the article examines the issue of urban competitiveness on the basis of sustainable development principles. After a systematic and comparative analysis of the concepts published in the scientific literature, this article accomplishes the following: It defines the concept of competitiveness in urban areas; it identifies the inclusion aspects of the sustainable development principles into the assessment of urban competitiveness; it presents the research into urban competitiveness assessment models; and it carries out an integrated competitiveness assessment of the Baltic capitals in the period of 2014–2019 based on the principles of sustainable development by applying the integrated competitiveness assessment model that is based on the principles of sustainable development (MDK).