Recent studies have shown that universities and similar public sector research institutions differ in their relationships with user organizations both in relation to the type of new knowledge transferred and to the mechanisms of such transfer. Both the relationships and knowledge transfer are critically affected by the level of sophistication of the receiving companies. The creation of ‘urban knowledge’ has many dimensions, which means that spatial proximity to the sources of new knowledge does not automatically encourage firms to take advantage of what is on offer. Thus, the knowledge generated by universities has a critical function on the availability of local and international knowledge to the city and region where it is located, but much needs to be done for this knowledge to become relevant and absorbed in its geographical area. To show these dual processes, this chapter analyzes the region of Western Sydney at two levels: the knowledge demanded and the knowledge produced and transferred. Ultimately, the answer to the question of how universities can best contribute to the intellectual vitality of the place where they are located and which knowledge is relevant.