Finland's capital has always been a seat of design and technology. It fostered the careers of Eliel Saarinen and Alvar Aalto, and without Nokia we might still be carrying brick-size cell phones. As a place to visit, however, Helsinki has usually lagged a few steps be hind the rest of Scandinavia. But since joining the European Union in 1995, the country—and the capital—has started to catch up spectacularly. Helsinki is now the second fastest-growing metropolis in the EU, and Finland was called the world's most competitive economy last year by the World Economic Forum. "Breaking out of our cage" is how Eeropekka Rislakki, editor of the restaurant magazine Viisi Tähteä (Five Stars), terms the recent turnaround. "Everything's changing rapidly," he says.

"It's forcing us to think and act globally, to double our creativity and efficiency, to raise our competency in music, fashion, design, technology, and culinary skills." It is the newfound sophistication in the dining scene that Helsinkians seem most proud of. The city has 800 restaurants for its half-million people, including a dozen serious dining rooms that have opened in the past two years. Deter mined to define a fresh, superior Nordic cuisine, local chefs are concentrating on pure seasonal ingredients, from game birds and crayfish to mushrooms and berries. Drawn by Helsinki's openness to innovation, young talent from all over Europe has also set up kitchens here, bringing with them culinary ideas the city has never seen. There is Catalonian-Basque at La Cocina and French-Japanese at Mecca, the newest venture of Hans Välimäki, whose first Helsinki restaurant, Chez Dominique, has two Michelin stars.

Many chefs are rediscovering native traditions, too, starting, naturally, with fish. (Finland has some 180,000 lakes full of wild perch, pike, and whitefish.) Two of the more interesting kitchens are at Havis, in a restored sea captain's house, and the chic FishMarket, where the local bounty comes in nearly every way imaginable, from mousse to glow-fried (the latter involves hanging a fillet from a Peg-Board in front of an open fire). "Finnish chefs have more self-respect these days," explains Piia Uusitalo of Loiste, a restaurant in the Sokos Hotel Vaakuna. This rooftop dining room is like a time machine—chanterelle pie, sea buckthorn soup, and arctic char served in a space that hasn't been touched since the 1952 Olympics. "Five years ago it was thought that all good food came from abroad, but not anymore," she adds. At the vast and jam-packed Lasipalatsi (Glass Palace), chef Mika Gehör does classic renditions of wild fish, blini, and reindeer. And at Kappeli, a Victorian conservatory with pop-neoclassical interiors, the menu lists the same reindeer confit and boletus soup it did when the composer Jean Sibelius used to hold court here.

Understandably, Helsinki's hip crowd has its sights set on something a tad more modern—and Teatteri is its playground. The three-story theater from 1866 was redone by Eero Saarinen in the thirties and now holds a few moody cocktail lounges, two rooftop terraces, and a restaurant with enough white parachute cloth and rose-colored lights to rival South Beach. It is a Finnish ideal born from cold winter nights: one spot to drink, dine, and dance without ever leaving the building. Yet, for all its innovation, Helsinki is traditional at heart. There's not a Starbucks to be found, and as hard as it is to believe, the city's first true design hotel just opened in November. The stately 139-room Klaus K, named after the hero of a Finnish national epic, was once a school for girls. Now it's done up in bold graphic wallpaper with mega-thread-count sheets and iPod docks in the rooms. Torni, the capital's grand old hotel, has managed to keep up with the newcomer; the 152 rooms in this Art Deco landmark have all been recently refreshed, keeping their early-20th-century look, the original cage elevator, and the streamlined restaurant.

Both hotels are near the Esplanadi—lined with neoclassical buildings as well as the flagships of Marimekko, Artek, and Iitala—and not far from the Design District. This newly designated area has become Helsinki's biggest draw, with some 100 shops and studios clustered around the sensational Design Museum and Design Forum Finland. Along Uudenmaankatu and Fredrikinkatu streets are a number of small pottery, glass, and silver studios, plus boutiques like Cloth Gallery and Babú, where you will find daring dresses and jackets in exuberant colors. Be sure to visit Harri Syrjänen, a craftsman who combines his leather- and metalworking skills in beautiful handbags and briefcases; Ameba Design, a vintage fifties gallery that carries the fantastical brass lighting fixtures of Paavo Tynell (his chandeliers run up to $25,000); Grayscale, a design collaborative producing limited-edition glass vases and bowls; and Johanna Gullichsen, who offers bolts of cloth woven on a loom in the middle of the store.

Helsinki is an intimate place—you can walk the city in a few days—and it looks as if it'll stay that way. There's fierce opposition to building anything taller than the main cathedral, a gleaming white-and-gold souvenir from a century of Russian subjugation that ended with Finland's independence in 1917. But just because the cranes aren't busy bulking up the skyline, it doesn't mean there's no progress. Says Loiste's Uusitalo, "We're getting a lot of foreign visitors who ten years ago didn't even know Helsinki existed."

Address Book

KLAUS K From $270 to $630. 2–4 Bulevardi; 358-20/770-4700; www.klauskhotel.com
SOKOS HOTEL TORNI From $200 to $450. 26 Yrjönkatu; 358-20/123-4604; www.sokoshotels.fi
FISHMARKET Dinner, $100. 17 Pohjoisesplanadi; 358-9/1345-6220
HAVIS Dinner, $160. 16 Eteläranta; 358-9/6869-5660
KAPPELI Dinner, $90. 1 Eteläesplanadi; 358-9/681-2440
LA COCINA Dinner, $110. 10 Eteläranta; 358-9/1345-6749
LASIPALATSI Dinner, $100. 22–24 Mannerheimintie; 358-20/742-4290
LOISTE Dinner, $90. 3 Kaivokatu; 358-9/4337-6315
MECCA Dinner, $100. 34 Korkeavuorenkatu; 358-9/1345-6200
TEATTERI Dinner, $100. 2 Pohjoisespa; 358-9/6811-1310
AMEBA DESIGN 27 Korkeavuorenkatu; 358-50/567-1865
BABU 24 Fredrikinkatu; 358-9/608-406
CLOTH GALLERY 31 Fredrikinkatu; 358-9/6124-1006
GRAYSCALE 2 Uudenmaankatu; 358-50/60081
HARRI SYRJANEN 1 Ratakatu; 358-9/649-096
JOHANNA GULLICHSEN 18 Fredrikinkatu; 358-9/637-917

Insider Tips

The colonnaded, turquoisetiled 1928 YRJONKATU SWIMMING HALL (21 Yrjönkatu; 358-9/3108-7401) is a glorious old-world pool and sauna. Caveat emptor: Clothing is optional (there are separate days for men and women).

Make an appointment to visit AERO's basement annex (8 Yrjönkatu; 358-9/680-2185). It's full of midcentury furnishings and objects by Eero Aarnio, Tapio Wirkkala, and Kaj Frank.

The hilly KRUUNUNHAKA district, slightly outside the city center, has a terrific antiques row on Mariankatu: A dozen shops trade in Scandinavian furniture and fifties textiles and pottery.

The waterfront neighborhoods of EIRA and KATA JANOKKA are showcases of the National Romantic style, the country's answer to Art Nouveau. Pick up an annotated map of the area from the Museum of Finnish Architecture (24 Kasarmikatu; 358-9/8567-5100; www.mfa.fi).

HVITTRASK (358-9/4050-9630), the hand-built home and studio of architects Eliel Saarinen, Armas Lindgren, and Herman Gesellius, is a half hour from Helsinki in a bucolic setting that gives a sense of the forest that lies beyond.