This chapter explores the effect of Baltic trade on the institutional development of Pskov in the fourteenth and fifteenth centuries. It focuses on the territorial and institutional growth of Pskov, which on the eve of its incorporation into the Muscovite state resembled in many respects an early European commune. According to Mumenthaler, in Pskov and Novgorod there emerged a mixed type of commune bearing characteristics of both the Italian and Central European city. Until the thirteenth-century Pskov had been a small town in a remote northwestern area that was contiguous with the Estonian and Baltic tribes that populated the territory of the modern Baltic States. The chapter outlines the rise of Pskov trade in the fourteenth and fifteenth centuries, and discusses its social and institutional effects: it was not by chance that the commercial success of Pskovites was accompanied by serious changes in the political organization and social life of their city.