The aim of the research was to identify functional changes of villages in peripheral area of Klodzko County in the Sudetes Mountains in southwestern Poland. The study area has for many decades been classified as a marginal and problem region, mainly due to a substantial trend of long-term depopulation. However, in recent years the signs of economic revival have been observed. The study innovatively uses the functional typology of the smallest administrative units (villages) to recognize the character and spatial differentiation of functional transformations of these localities in the last 15 years following Polish accession to the European Union. The analyses were based on the data from the National Official Business Register. The results show an increase in the number of villages with dominant service functions, especially in tourism, and decrease in numbers of villages with the dominant agricultural sector. These changes can be interpreted as an illustration of evolutionary multifunctional rural development in marginal areas, which also affects villages previously classified as declining. The findings allow for proposing a new category of a "reviving village". Significant spatial differentiation of functional changes in the problem region suggests that local conditions exert a considerable influence on the course and scale of transformation in rural areas. Effectively, "problem area" is a heterogeneous category. Therefore there is a vital need for in-depth analyses, including new typologies, of the smallest administrative units (villages), to capture current processes in rural areas and to adapt strategies, support, and development policies to local assets and site-specific needs.