As cities increasingly turn into key players of climate change mitigation, urban innovations for sustainability move to the centre of interest. A general characteristic of such innovations is that they aim at the systemic transformation of socio-technical configurations and infrastructures in cities towards more sustainability. The proximity and high density of interconnections in cities are conducive to innovations reaching across infrastructure sectors, such as the integration of electric vehicles in smart electricity grids. Urban initiatives to generate sustainable innovations are often framed as ‘urban laboratories’ or set up as sustainable model districts focusing e.g. on car free living or the increased integration of ICT in smart city districts. In this chapter we will work out the characteristics of transformative urban sustainability innovations and emphasise some of the challenges of governing sustainable urban change. As an empirical illustration we will discuss the development of a Smart City district in Vienna.