This article is devoted to substantiate the theoretical principles to the research of factors and trends of small cities development. The significance of the research topic is linked with the fact that namely small cities interconnect the vast expanses of Russia in a unique space. However, a large number of socio-economic problems in small cities contribute to the decline in the life quality of the local population, which stimulates the population flows to the large and major cities and leads to depopulation of large territories. This explains the growing scientific interest to the problems of small cities development and finding ways to solve the identified problems. The author analyzes the theoretical approaches to research the spatially localized systems. It was resulted in the author’s understanding of locality, the factors and the criteria of the local socio-economic systems delimitation. Based on the integration of spatial and systematic approaches, the author justified the theoretical principles to study the factors and development trends of small cities as a specific local socio-economic systems being incorporated in the socio-economic space in the region. In addition, there were determined the essential characteristics of a small city as a local socio-economic system. In conclusion, the author claims that integrated use of spatial and systematic approaches to research the small cities will provide an objective, multidimensional picture of their socio-economic development that will definitely contribute to the development of effective methods and management models on both local and regional level.