Cities are under pressure to become competitive due to the remarkable changes in technology, political and social frameworks. Moving towards the concept of knowledge cities is one of the efficient mechanisms by which cities can respond to this challenge. Creation of successful knowledge clusters is proposed as a means of achieving greater competitiveness and therefore creating a successful knowledge cities which can be consider as an engine of economic development. Therefore there is a growing interest worldwide [1] on emerging cluster initiatives and similar innovation policy agendas particularly in the case of developing countries. The main focus of this study is to investigate the role of two industrial knowledge-based clusters (Saffron and Food) located in the North-East of Iran (the City of Mashhad), in creation of Mashhad knowledge city. For reaching above purposes numbers of interviews were conducted. Interviews include both quantitative and qualitative questions that were conducted with 19 stakeholders including 6 interviews from each industry cluster considered in this study and 7 interviews with the government representatives working in Ministry of Industry and Mines in this region. The overview is as follow: Results of the interviews revealed that although the activity for cluster formation related to these two industries was started at the same time, however, evidence shows that saffron cluster can be considered more active thus contributing more in the creation of Mashhad Knowledge City. This paper concludes by discussing managerial implications for industry and government for promoting the current situation of these two industrial clusters.

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