This study proposes to replace the ‘multiculturalism’ approach in urban policy making with an approach that is focused on ‘interculturalism’. Cities need to facilitate dialogue, exchange and reciprocal understanding between people of different backgrounds to remain competitive on the global stage. The study identifies strategies to help cities unlock the potential of their economic ‘diversity advantage’. The intercultural approach seems to hold potential. The concept of diversity advantage helps to identify the potential economic benefits of diversity. The authors should be weary, however, not to promote ‘interculturalism’ as a panacea in urban policy making.