The peripheral and semi-peripheral roles of islands are being challenged and contested as contemporary island cities assume positions as engines of growth and become centres of progress for driving economic development. Notably, island cities around the globe have become instrumental in shaping and influencing the dynamics of urban development as cities now compete with each other to strategically position themselves in today’s competitive global economy that leverages creativity and innovation. Particularly in a creative economy, the availability, quantity, and quality of unique cultures; creative talents; and creative/cultural industries within a city are differentiating and determining factors that can boost a city’s position and subsequently spur economic growth and progress. Against this backdrop, this paper explores the position of the island city of George Town (Penang) en route to becoming a Creative City. This paper highlights the island’s urban dynamics as well as discusses the promise and perils of transforming George Town into a Creative City in its own right.