Clusters are considered crucial nodes in the ongoing transformation of international value chains (IVCs). Due to technological advancements and external shocks, such as pandemic and political conflicts, value chains (VCs) have been spatially and functionally shortening, and clusters are well suited to address the resulting demand for more diversified and higher value-adding activities in geographical proximity, such as European economic area. However, clusters differ in their positions and capability to advance in IVCs, which induces the research problem of the conditions for cluster upgrading (CU). This monograph aims to develop a theoretical framework for regional CU and empirically verify this framework based on ICT clusters in Europe. It advances the theory of upgrading by linking the VC governance and capability approaches, broadening the empirical evidence on the conditions of CU, and providing policy recommendations. The unique value of the findings from research and practice results in the identification of the determinants for CU and conceptualizes them into new theoretical constructs of the sufficient Framework Conditions and the necessary and sufficient Public-Private Knowledge Governance. Our empirical basis are European clusters in ICT, an industry being one of the Key Enabling Technologies (KETs) for innovation and VC transformation.