Universities are considered as the central actors for developing knowledge needed to drive economic growth and development, thus it is important to study how well universities manage this role. In particular against the background of knowledge-based developments which have increased lately. Therefore, the aim of the paper is to review research on universities and knowledge-based development in order to identify gaps in our understanding. In accordance with this aim, the following research questions were formulated: Which areas are researched? What is the gap in the literature? What are the main findings of the reviewed studies? What are possible directions for further research in the field? We propose the approach of a literature review for the period 1997-2016 in order to answer the question on the role of universities in knowledge-based development. The review resulted in 49 empirical studies, and four main themes were identified: knowledge transfer from universities to industry, universities as component of knowledge city design, universities and knowledge-based development, and university-industry collaboration. The paper concludes with a research agenda highlighting several promising areas for future research.