The aim of this paper is to make conclusions regarding the allocation of EU structural funds in the programming period 2004-2006 in Latvian regions as well as to give suggestions for the optimization of allocation of EU cohesion policy financing in Latvian regions. Data of the allocation of EU structural funds in the programming period 2004-2006 shows that the allocation is proportional to distribution of inhabitants in the regions and that the most part of financing and the highest financing per capita has been received by most developed regions. Exception is the priority No.4 “Promotion of Development of Rural Areas and Fisheries” where higher financing per capita was received by less developed regions. Using the methodology which was used to allocate EU funds in the programming period 2007-2013 between NUTS II regions and statistical data for the year 2005 the allocation of EU funds in Latvian NUTS III regions has been calculated. The proposed methodology earmarks highest financing per capita to less developed regions and eliminates situation where the allocation is proportional to the distribution of inhabitants in the regions. At the same time the establishment of regional quotas requires creation of EU funds regional programmes and thus significant changes in the EU funds management system.