Rural development has attracted the interest of European regional and agricultural policies in the last two decades. This is more evident after the late 1990‘s when rural development became the second pillar of Common Agricultural Policy (CAP). In Greece, traditional agricultural programs have given their place to rural development programs. This shift of emphasis in European agricultural policy reflects the change in the way rural development is perceived at an international level. Rural development is no more synonymous to agricultural development and the role of other factors such as alternative employment opportunities and accessibility to urban centers is widely recognized. Greece has a large agricultural sector compared to the European average, although employment in the primary sector has decreased significantly in the last three decades. In terms of rural development great differences are observed among regions which can be attributed to differences in agricultural potential and accessibility to the markets as well as to a differentiated degree of incorporation to international markets. The prospects of the agricultural sector in Greece would not be considered as favorable, especially after the latest CAP reform. Therefore rural development has to be promoted through non-agricultural activities or through some innovative agricultural activities. In this paper a series of indices describing the agricultural potential in the NUTS III regions in Greece as well as several aspects of rural development will be presented. Statistical analysis, mostly classification techniques, will be employed in order to explore the factors contributing to rural development in Greece. Special attention will be given to the introduction of organic farming in Greece and its potential contribution to rural development. Organic farming is considered as an innovative agricultural activity and it can be a viable alternative for declining rural areas. Finally, rural development policies in Greece, through regional policy programs and the current Rural Development Program, will be presented, with emphasis on the shift from measures for the agricultural sector to measures for rural development. Special consideration will be given to the measures addressed to organic farming and their effectiveness in the development of the sector will be discussed.