This article aims to analyse the effects of plague on the long-term development of Italian cities, with particular attention to the 1629–30 epidemic. By using a new dataset on plague mortality rates in 56 cities covering the period c. 1575–1700, an economic geography model verifying the existence of multiple equilibria is estimated. It is found that cities severely affected by the 1629–30 plague were permanently displaced to a lower growth path. It is also found that plague caused long-lasting damage to the size of Italian urban populations and to urbanization rates. These findings support the hypothesis that seventeenth-century plagues played a fundamental role in triggering the process of relative decline of the Italian economies.