The paper analyses the theory about economic geography and regional development, as well as regional policy of the European Union. The aim of the paper was to determine the importance of the new economic geography, to analyse how the regional policy of the European Union is implemented and what is the role of European Union funds in its implementation. The paper emphasizes the importance of the new economic geography as a relatively young theory explaining regional development, including the regional development of the European Union, as well as the importance of regional policy of the European Union. European Union regional policy aims at investing in less developed regions of the Union and is large share of EU budget is allocated to those regions, but such a policy significantly also affects all of the Member States regions. The problems that the European Union's regional policy seeks to address can be related job creation, stimulating economic development, environmental protection, energy, promoting sustainable urban transport systems, etc. Therefore, the problems of each region can be solved by good use of the support provided by the European Union trough regional policy and by using significant financial resources within its funds.