The paper analyses the relationship between the growth of the transit infrastructure and the developments in Tilsit in the period 1514 to 1552. The place of Tilsit in the competition between the merchants of Gdansk, Königsberg and Kaunas for the transit of goods by the River Neman is discussed. The paper reveals how, due to the geo-political circumstances, Königsberg managed to establish itself and to subordinate Tilsit to its trading system. It examines how and why Tilsit turned from being an outer castle settlement (Flecken) to the first town established in the Duchy of Prussia. The dynamics of the growth of the number of inns in Tilsit, their ownership, and the official and family relationships of the owners are examined, as is the weight and the role of innkeepers in the process of Tilsit turning into a town.