This paper aims to stress the nexus between sustainable development, economic freedom and local participatory democracy in 21 European smart cities. The development of smart cities is strongly correlated with technological advancements and improved access to pub-lic services for all residents. Furthermore, smart cities are characterized by efficient man-agement of social, economic and environmental resources and a strong partnership be-tween the public and private sectors. The paper aims to map the dynamics of local partic-ipatory democracy in European smart cities and to identify several relevant predictors of local participatory democracy. The sample is represented by 21 European capitals (20 EU countries plus UK), which are included in the Smart City Index (SCI). Using the quantita-tive design based on both statistical regressions and structural equations modelling (SEM), the paper shows positive statistical correlation between economic factors, sustainable de-velopment, political culture, education and the level of local participatory democracy. Be-sides the exogenous variables, the study emphasized the main priority areas, which might be seen as urgent issues for local governments. The conclusion of the paper underlines the fact that economic freedom, sustainable development, upper secondary education, afford-able housing and an increased level of citizens’ engagement could predict further evolu-tions of the local participatory democracy in 21 European capitals.