Small towns, as intermediate links within the settlement system, play a crucial role in spatial balance, service provision, and the strengthening of urban–rural connections. However, in many regions of the country, including Gilan Province, these towns face functional weakening, declining active populations, and marginalization in relation to larger cities. This study aims to develop a model for enhancing the functional roles of small towns in Gilan within the framework of a regional urban network. The research is applied in purpose and employs a descriptive–analytical approach. To achieve the research objectives, a combination of documentary review, statistical analysis, and multi-criteria decision-making techniques was used. Data were collected from national population and housing censuses, regional development master plans, and expert opinions in urban planning. In the first step, small towns in Gilan were evaluated using demographic, economic, service, and spatial indicators, and their dominant roles within the urban network were identified. Subsequently, a SWOT analysis was conducted to identify strengths, weaknesses, opportunities, and threats, and corresponding development strategies were formulated. To prioritize these strategies, the QSPM technique was applied. The results indicate that a significant portion of small towns in the province lack distinctive functional roles and remain largely dependent on larger urban centers. Nevertheless, some towns exhibit the potential to perform specialized functions, such as local services, agricultural support, tourism, and regional logistics. Based on these findings, the proposed model emphasizes strengthening specialized roles, improving functional linkages with surrounding settlements, and developing intermediate structures, such as “urban villages,” as tools to enhance the functional capacities of small towns. This model can serve as a foundation for spatial policy-making and balanced regional development planning in Gilan Province.