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Creative economies can establish sustainable development through co-creative cultural projects. Project management practice and particularly project governance can balance creativity and control fostering the co-creative environment that inspires and ignites innovation. The success of those cultural projects is the platform that leads to long-term development and growth.   This thesis work aims to answer the following research question, “How will project governance structure provide the environment for the co-creation approach to flourish and enhance project performance?” The objective of this research is to examine how the project governance structure creates a conducive environment for the co-creation approach to burgeon and boost project performance.   The authors investigate the subject by building a theoretical frame of reference, formulating a proposition and designing the research strategy in order to answer the research question. This research applies the qualitative method through semi-structured interviews based on a case study on Umeå 2014 as the ECoC. Thirteen respondents participated in this research, all of whom are members of the Umeå 2014 Project Team. As secondary data, six interviews with Umeå 2014 project owners were investigated and analysed in order to support and increase the reliability of the research findings from the primary data analysis. All primary and secondary data were analysed based on the theoretical framework.   The research revealed that project governance nurtures the environment necessary for co-creation to flourish. The co-creation approach will flourish when developed within the mixture of hierarchical and relational project governance structures that foster co-creative elements. The synergy between co-creation and project governance will boost the potential to achieve sustainable development and long-term growth.