Stockholm is the cultural, media, political, and economic centre of Sweden. The Stockholm region alone accounts for over a third of the country's GDP and is among the top 10 regions in Europe by GDP per capita. By the second half of the 19th century, Stockholm had regained its leading economic role. New industries emerged, and Stockholm was transformed into an important trade and service centre as well as a key gateway point within Sweden. The population also grew dramatically during this time, mainly through immigration. At the end of the 19th century, less than 40% of the residents were Stockholm-born. Settlement began to expand outside the city limits.

The 19th century saw the establishment of a number of scientific institutes, including the Karolinska Institute. The General Art and Industrial Exposition was held in 1897. From 1887 to 1953 the Old Stockholm telephone tower was a landmark; originally built to link phone lines, it became redundant after these were buried, and it was latterly used for advertising. Stockholm became a modern, technologically advanced, and ethnically diverse city in the latter half of the 20th century. Many historical buildings were torn down during the modernist era, including substantial parts of the historical district of Klara, and replaced with modern architecture.

However, in many other parts of Stockholm (such as in Gamla stan, Södermalm, Östermalm, Kungsholmen and Vasastan), many "old" buildings, blocks and streets built before the modernism and functionalism movements took off in Sweden (around 1930–1935) survived this era of demolition. Throughout the century, many industries shifted away from work-intensive activities into more high-tech and service industry areas. Currently, Stockholm's metropolitan area is one of the fastest-growing regions in Europe, and its population is expected to number 2.5 million by 2024. As a result of this massive population growth, it has been proposed to build densely-packed high-rise building in the city centre connected by high-rise walkways.