This article addresses the influence of the Smart City concept on the investment potential of urban areas due to the existing demand of society and the state to attract additional investment flows for ur-ban development. In this regard, the state pays special attention to improving the living standards of urban residents, since it leads to a positive change in the investment potential of urban areas. This pa-per identifies the mechanisms of influence exerted by the Smart City concept on the living standards of citizens, as well as the relationship between the investment potential of the area and quality of life indicators. On the basis of a systematic approach, the mechanisms of decision-making at the communi-ty level were formulated, with the necessity of developing a strategy for applying the tools of the Smart City concept being proven. It was concluded that it is necessary to review the management of urban settlements, given the current level of socio-economic development. The technological principles and mechanisms for the implementation of this concept were formulated. As a result, efficient city man-agement using modern information technology and technical solutions, provided the efficient goal set-ting and determination of performance indicators, will improve the level of investment potential of cities under the admissible competition between them within the country.