On a cold January morning in 1995, a powerful earthquake rocked Kobe, Japan, killing thousands and shattering the economy of one of Japan’s most vibrant cities. Three years later, a small group of local leaders, realizing that much of the lost industrial output would never return, hatched a plan to develop the city as an international hub for biomedical research and innovation. Out of this was born the Kobe Medical Industry Development Project. Housed on part of an artificial island, the project integrates basic, applied, clinical, and translational research in regenerative medicine and biomedical equipment, providing a comprehensive platform for research, development, and commercialization of new medical therapies and technologies. This article reviews and assesses the achievements of this initiative in the context of the broader effort by central and regional governments to harness localized knowledge and resources as catalysts of sustainable economic development.