This chapter supplements the analysis of the physical changes in Thessaloniki’s urban environment during the second half of the 19th century by analyzing the evolution in municipal governance that accompanied them. Major changes following the arrival of reformist governor Sabri Pasha in 1869 included the demolition of the walls, expansion of the port, a rail connection first with Belgrade and then with Istanbul, construction of a tram line and a series of large public buildings. Because of its geostrategic importance, Thessaloniki was chosen by Ottoman Tanzimat authorities as one of the seven imperial cities in which to apply new, modern municipal institutions. There were important continuities with the previous Ottoman regime, as it had been shaped over three centuries on the basis of ethnic coexistence—these were reforms, not a break with the old system.