Regional, national and global cities are disproportionately located on small islands and archipelagos. The ‘spatial turn’ within island and urban geography increasingly privileges abstract notions of space, yet the prevalence of big cities on small islands suggests that sensitivity to place‐specific spatial factors is necessary if we are to understand both islands and the urban. Whereas previous studies of island cities have tended to underplay the effect of either the island or the urban, the present paper advocates an urban island studies that seeks to explain why islands and cities are so strongly associated. The paper argues that benefits of island spatiality encourage the establishment of seats of government and trading posts on small islands: Territoriality benefits assist political and economic elites in maintaining local authority and projecting power outwards, defence benefits help protect local powerholders from external military threat and transport benefits make strategically located small islands ideal sites for port industries. Land scarcity caused by island spatiality subsequently leads to urban densification and powerful agglomeration economies, resulting in the formation and growth of island cities. Examples from island cities and urban archipelagos such as Copenhagen, Guangzhou, Hong Kong, Lagos, Macau, Mexico City, Mumbai, New York City, Paris, Tokyo and Zhoushan demonstrate that urbanisation and city formation occur in place as well as in space. Orienting toward urban island studies provides insight into both island and urban processes.