Development in the last decade was characterized by economic, social and spatial shrinking. This phenomenon is observed in many Western and post-Soviet countries. In spite of the existence of wide-spread research and publications on shrinking the concept rarely are applied to rural areas outside metropolitan regions. Until now there is no national-level in-depth research or targeted policies towards shrinking phenomenon in Latvia. The aim of the study is to examine if and how the concept of population shrinkage is represented in Latvian rural ar eas, and how this phenomenon might be incorporated in spatial development of the country. The article explores the inconsistence of application of shrinking at the Latvian context. Theoretical concepts used in this research are the result of a review of the literature. Empirical research is carried out in seven local municipalities of the former Alūksne, Balvi and Gulbene districts in north-eastern Latvia by interviewing local government employees and analysing statistical data and policy documents. Spatial shrinking is wider concept than population decline by in corporating not only demographics but also drivers, outcomes and impacts of the process as well as governance, planning and policy response aspects. Our study indicates that whole Latvia, both its rural and urban spaces, has to be considered as shrinking territory that needs to prepare place-specific policies for different areas. The investigation results approve that Latvian countryside can be defined as typically shrinking. This process requires a change in attitude among decision-makers at both national and regional governmental levels. The scarcity and incompleteness of available data is reflective of the realities of regional policy implementation. Drivers of rural spatial shrinking are due to socio-economic structural changes and rescaling and consequent changes of former economic, social and cultural linkages. Shrinkage processes have an impact on rural social capital and services. Shrinking requires the need for a set of innovative; knowledge-, evidence-and place-based; coordinat ed; pro-active; multi-disciplinary; spatial; economic and socially-targeted policy measures.