This article explores the formation and subsequent transformation of rural-urban agglomerations, emphasizing the importance of inclusivity in these processes. It delves into various aspects of decentralization and local governance in Ukraine, highlighting united territorial communities as precursors to rural-urban agglomerations. Additionally, the article contextualizes transformational processes as changes in existing institutional structures and the formation of new systems influenced by both endogenous and exogenous factors. It examines the concept of agglomeration as a form of territorial concentration of resources, creating a complex dynamic system with strong economic, social, and infrastructural links. For Ukraine, the significant size of its territory and the territorial remoteness of administrative units influence the territorial-sectoral distribution of the economy and settlement systems. The study identifies key determinants influencing the development of these agglomerations, including economic, social, demographic, environmental, institutional, spatial, and cultural factors. The research outlines the specifics of sectoral orientation and socio-spatial development. The problems related to the institutional and legal framework for the functioning of rural-urban agglomerations in Ukraine are presented, along with the methodological role of institutional foundations in the transformation of these agglomerations. The need for new institutional transformations is outlined, emphasizing the implementation of inclusiveness principles as a guarantee of sustainable development. The article concludes with a call for further institutional regulation and the promotion of inclusive development to address the issue of uneven territorial development and economic specialization in Ukraine. Recommendations for further development include institutional regulation, public-private partnerships, selfgovernance conditions, and inclusiveness. The article highlights the importance of tailored institutional changes and active community involvement in ensuring the effective transformation and development of these agglomerations.