An increasing share of businesses and other organizations are keen to use smart work (distant work, telework); it has become a wide-spread practice that allows employees and their tasks to be distributed across settings away from a physical business location (i.e. a central office). New ICT solutions, rapidly developing technologies, as well as managerial changes can facilitate an increasing proportion of teleworkers. Smart work itself is being identified with an increase in productivity and satisfaction of the employees. It also gives an opportunity to digitally participate from distant locations, including the countryside, in the knowledge economy. The purpose of this research is to identify the actual and potential use of telework in order to promote regional development. The principal results are as follows. In order to promote regional development using telework, numerous EU member states have created smart work centers in rural territories, e.g. resource centers in France, work hubs in Great Britain and telehouses in Hungary. The results of the questionnaire of inhabitants in two rural municipalities confirm that there is a potential for the use of telework also in Latvia. At the same time, most of the respondents seem to be overly skeptical about the use of telework to perform their professional duties; therefore additional activities for the promotion of telework should be made. The semi-structured interviews with teleworkers and the owners of the co-working space Birojnica in Latvia show a more detailed picture of the daily life of a teleworkers. Teleworkers feel more independent, creative and productive. The main drawbacks are the loss of communication and control and the decrease in socialization. Most of the respondents see a potential in establishing smart work centers in the largest towns (especially towns with universities and vocational schools) and to some extent – also in rural territories. A promising solution seems to be the creation of smart work possibilities in and around already existing business support infrastructure, e.g. business incubators. To conclude, smart work brings sustainable innovation in labor management of the 21st century. It provides positive effects on productivity, maintains a good work life balance, reduces commuting/travel time and the carbon footprint. Moreover, it can sustain the rural populations and thus counterbalance the concentration of the economic activity in metropolitan areas. However, further research is required in order to offer sustainable solutions for the telework outside metropolitan areas.