The main aim of this paper is to find out what rural development is, how to sustain and increase its development. Therefore, the purpose of this paper is to present the real state of sustainability of rural development in the Republic of Croatia. The paper is divided into two parts. The first part reinforces the notions of rural areas and rural development itself. When it comes to Rural development policy, it should be emphasized that it is a very complex system which is not only defined by one single development policy for individual activities, but also about all the components of major development, which can be seen in Chapter Four. The same chapter also defines three basic goals of Rural development policy. One of the important parts of policy implementation, is financing rural development, presented in Chapter Five, which also discusses social capital and its role in local community development, and partnership and participation as instruments of sustainable rural development. Chapter Six discusses the sustainability of rural development and outlines some of the barriers that disable sustainability. Local partnerships are what enable and improve the progress of rural development, therefore the Local activation groups (LAGs) have been created, which is discussed in Chapter Seven. The second part of the paper begins with an Chapter Eight comparing the two counties and their rural area, namely Požeško-slavonska županija and Zadarska županija. At the end of the paper the conclusion and possible proposals for the progress of rural development are stated.