Financial instruments under Cohesion Policy (CP) are increasingly identified as a more efficient and sustainable alternative to complement traditional grant-based financial support. They are essential in triggering investments characterised by revenue-generating and cost-saving activities. The chapter presents the use of financial instruments for sustainable urban development. In the face of increasing urban needs and budgetary constraints, any measures which maximise private investments, coupled with limited public spending, while contributing to the achievement of the CP objectives of economic, social and territorial cohesion were widely welcomed. Using the Joint European Support for Investments in City Areas (JESSICA) initiative, the chapter outlines a regulatory framework for allocating CP funds to urban development funds. It describes the institutional and administrative system of JESSICA and discusses the experience gained through the implementation of this initiative, paying attention to both significant opportunities and some shortcomings.