This chapter deals with the establishment of a new capital city in the Kyoto river basin during the reign of Emperor Kammu in the eighth century. It describes the construction of the Greater Imperial Palace, the layout of the emperor's residential compound, and the existence of public buildings, facilities and spaces. Little is known about individual residential land occupancy and use in the early days of the city; individuals who held court rank may have been entitled to varying amounts of land. The most conspicuous and best-known part of large official or courtly population was the political and social elite: the imperial clan and the court nobility. The Heian noble wife also enjoyed many customary rights that tended to give additional substance to the degree of her social and economic autonomy. The chapter also discusses the Heian officialdom's functions, and the capital city's economy and administration. The Heian city was also an intensely ceremonious and ritualistic city.