The establishment of the Rapallo border in 1920 provided the political basis for the construction of extensive fortification systems on the Italian and Yugoslav sides. While the Italians built the 1,851-kilometer-long Alpine Wall defense system along the entire country’s land border, the Yugoslavs built the approximately 250-kilometer-long “Rupnik” defense line along the Yugoslav-Italian border. The research examined the spatial impact that the establishment of the Rapallo border, or more specifically the fortification system of the Rupnikova Line, had on the morphological development of the Žiri settlement. The results of the analyses show the multifaceted meanings and influences on the development of space as a result of the division of a homogeneous territory. In addition to the obvious negative effects on the development of the population living in this territory, the research showed that the imposed dynamics as a result of consolidation influenced the development of the wider area. The settlements of Žiri and Idrija are compared with the aim of establishing an overview of development differences in set time intervals. The established development momentum followed - in Idrija on the Italian side and in Žiri on the side of the Kingdom of Yugoslavia - different motives and principles, and left visible, different and distinct patterns of built space in the area even today. The unique situation of the area under consideration is the basis for the design of future spatial development, which, based on the differently evaluated heritage in the research and its influence on the development of the space, can find a motive for the uniqueness of the development in this heritage, and thus the creation of an expressive identity. The article aims to illustrate the significance and value of the spatial implications of the heritage of the Rapallo border through historical contextualisation and contemporary urban theory.