Cosmopolitan Chiang Mai, Thailand’s second city, is regarded by many as its rightful, historic capital. It’s a fascinating and successful mix of old and new, where 1,000-year-old temples and quiet pagoda gardens exist side by side with glittering new hotels and shopping malls. Simple restaurants serving local fare rub shoulders with sophisticated restaurants that would merit notice in any western metropolis.

The city is enjoying boom times and expanding at a giddy rate as it continues to develop beyond its role as a provincial city to become a gateway to Myanmar, Laos, and western China. Since the late 1990s, luxury hotels have been shooting up, attracting more business and leisure travelers. The country's main highway, Highway 1, bypasses Chiang Mai as it runs between Bangkok and Chiang Rai, but the city is at the center of a spider's web of highways reaching out in all four directions of the compass, with no major city or town more than a day's drive away. As one local magazine put it, "Chiang Mai is on the fast track to the future"—quite literally, since plans have been approved to build a high-speed rail link with Bangkok, reducing the current 696-km (430-mile), 12-hour journey to less than four hours.

First impressions of modern Chiang Mai can be disappointing. The immaculately maintained railroad station and the chaotic bus terminal are in so-so areas, and the drive into the city center is not all that scenic. First-time visitors ask why they can't see the mountains that figure so prominently in the travel brochures. But once you cross the Ping River, Chiang Mai begins to take shape. Enter the Old City, and Chiang Mai's brooding mountain, Doi Suthep, is now in view—except when shrouded in the month of March, when heavy air pollution is caused by farmers burning their fields for the planting season.

Whenever you visit, there's bound to be a festival in progress, and with guesthouses and restaurants in the Old City vying with each other for the most florid decoration, it feels like a party year-round. In the heart of the Old City, buildings more than three stories high have been banned, and many of the streets and sois have been paved with flat, red cobblestones. Strolling these narrow lanes, lingering in the quiet cloisters of a temple, sipping hill tribe coffee at a wayside stall, and fingering local fabrics in one of the many boutiques are among the chief pleasures of a visit to Chiang Mai.