<p>The paper focuses on the diversification of single-industry towns’ economy and identifies the role of networking in this process. The author presents preliminary results of the Russian Science Foundation project "Sustainable development of the territorial<br />economy through networking of small cities and district centers". The goal of the project is to identify opportunities to overcome the growing gap in the level and quality of life in small Russian towns vs. large cities and megacities, and to propose measures for combining<br />resources and competencies of small cities in the framework of network relationships. The cases of Tula, Vladimir and Perm regions were in the focus of research. To achieve the research goal, a set of methods was applicable, including system analysis, formal logical<br />method, dialectical method, as well as quantitative and qualitative marketing research. This allows us to draw conclusions about the presence of structural problems and contemporary trends, and to offer recommendations taking into account the specialization of small singleindustry towns. Serious problems faced by the municipalities of single-industry towns, and the obstacles to efficient inter-municipal cooperation have been identified. At the same time, international evidence shows that the formation of a favorable institutional<br />environment for mutually beneficial combination of resources and competences of singleindustry towns with different specialization facilitates the implementation of joint projects and makes it possible to accelerate the processes of economic diversification by using the<br />benefits of a network coordination mechanism</p>