Since introduced in 1985, the European Capital of Culture often figures as the most 'successful' European Union cultural policies. It is also regularly evoked as representative of contemporary strategies of culturally-inflected urban development. That is, where city leaderships look to 'culture' as a means to make their cities more competitive, and to manage urban populations. This dissertation uses this European cultural policy as an entry point through which to compare how culturally-inflected urban development has shaped understandings, representations and experiences of culture and social relations in two European cities: Liverpool, European Capital of Culture in 2008, and Marseilles, titleholder in 2013. The central question addressed here is whether it is possible to observe similar opportunities and barriers for urban dwellers of diverse backgrounds living in impoverished urban areas to participate in city and cultural-making processes. The two cities have comparative value because of similarities they share within multi-scalar hierarchies of power. Historically, both were significant global ports of empire; both have frequently been associated with large working class populations that are often racialised or criminalised; both are regularly depicted as 'cities of crisis' or 'uncultured places'. The two urban localities are situated relatively low down on political and economic inter-urban league tables. Since the 1980s, they have become the sites of major market-led urban restructuring processes, exacerbated in the context of recent austerity policies. There are also significant variations; in national and local frameworks of urban governance, differing relations with 'Europe' and distinctive histories of race and class. Drawing on ethnographic fieldwork with a range of urban actors (urban dwellers in impoverished neighbourhoods, cultural policy workers and urban decision-makers) between 2004 and 2014, I explore how understandings and experiences of culture and social relations were differentially reconfigured in relation to this European cultural policy initiative. My findings point to similarities in the ways in which cultural policy materialised in these two places historically understood as lacking 'cultural distinction.' Dominant understandings of culture value were defined in relation to hierarchies of value constructed in social networks that extending beyond the city (the nation state, Europe, the world). In both, cultural policy-making was closely linked to economic growth policies. As elsewhere in the world, these trends resulted in growing professionalisation of the arts, gentrification of the city centre and increasing marginalisation of local cultural workers and urban dwellers living in impoverished areas, in processes inflected by gender, race and class. The study also draws out some of the complexities and unexpected outcomes of culturally-inflected urban policies. Nuancing studies on cultural diversity and gentrification, it offers an ethnographically sensitive yet critical reading of how such culturally-inflected urban development materialises in particular locations, contributing to broader understandings about the production of social difference and competing understandings of cultural value in cities, in unequal relations of power.