Japanese cities have mainly expanded their urban areas horizontally. In recent years, however, drastic vertical integration has occurred through the construction of multistoried buildings, particularly in CBD. In large cities the increase of offices and motor cars has aggravated managerial circumstances of retail in CBD. As a result, underground shopping streets have been constructed as a type of vertical differentiation of urban functions. Connected with the basement of multistoried buildings, they have created new space for retail in CBD.The author investigated underground shopping streets in Nagoya. The main results are summarized as follows:(1) Underground shopping streets in Nagoya were constructed at the traffic junctions namely “Sakae” and “Nagoya-ekimae” (the front area of Nagoya Station), below public roads, simultaneously with the construction of subways. They were connected with the subway stations. This has provided many people with easy access to underground shopping streets, showing rapid development after 1957.(2) The Process of development on underground shopping streets In the first place a group of shops were located along the underground pedestrian passageways which connect subway stations and other means of transport. Then shopping promenades interconnected these areas and the basements of adjacent multistoried buildings. This resulted in the increase of underground space for retail. A further step was taken after 1969. The extension of underground shopping streets was run on such a large scale as over 10, 000 square meters and was linked to the existing underground shopping streets. Thus the enlarged underground shopping streets came to be the central shopping areas of the city.(3) According to the categories of business they contain, underground shopping streets can be classified into two types: one containing many restaurants, coffeehouses and food stores with a choice variety, the other containing many specialty shops dealing in clothes. The underground shopping streets below the front area of Nagoya Station belong to the former type. Those at Sakae district belong to the latter; Sakae has a long prosperous history as a central shopping center of the city.(4) There are many chain stores among shops on underground shopping streets. As their head offices are located in Tokyo, their window decoration and their line of commodities have lost regional characteristics peculiar to Nagoya. This has promoted among people of the city an inclination to the center-oriented fashion and culture.(5) Floor space of a shop on underground shopping streets is rather small compared to that of a shop on ground shopping streets. Because of the favorable location, the rents are very high. Shops on underground shopping streets thus specialize highly in the assortment of goods to attract young customers. Under these circumstances the underground shopping streets cannot raise their importance as central figures in retail of the city without maintaining a strong interdependence with neighboring department stores that aim at a large custom with a rich assortment of goods.(6) There are many branch stores on underground shopping streets and very few shops are run by proprietor in person. Thus underground shopping streets constitute a community of employees. Besides they are doing business with young people as regular customers, there are many young employees accordingly. The underground shopping streets with these young employees thus form a community of tradespeople functioning under the control of their head offices. It affords contrast against the community of merchants heretofore in general in Japan.(7) One of the reasons why underground shopping streets have developed in CBD of large cities in Japan is that there are many people availing themselves of public mass transport and that underground shopping streets have been constructed at its junctions.