After an introductory section that frames some conceptual issues surrounding the emergence of city-states, most of the chapter is devoted to a chronological narrative describing the case of southern Mesopotamia. This includes sections on the pre-’Ubaid period, the ’Ubaid period, the Uruk period, and the post-Uruk period. The key puzzle is how to explain the transition from scattered villages and small towns in the ’Ubaid period to large city-states with tens of thousands of residents in the Uruk period. Following the main narrative, we review causal hypotheses on this subject proposed by archaeologists and economists. These include ideas about climate change, migration, food production, manufacturing, trade, warfare, and culture. We also offer a synthesis of our own. In our view, the prime mover was increasing aridity, which motivated migration from outlying areas toward the south. As this process unfolded, commoner living standards fell, which enabled local elites in the south to employ commoners at a lower wage. When the wage had fallen far enough, urban manufacturing became profitable. Elite taxation of urban manufacturing was probably easier than taxation of rural agriculture, and this provided the fiscal foundations for early city-states like Uruk.