This paper explores the significance of palaestrae as a characteristic architectural feature of Greek gymnasia. First, the identification of palaestrae from the archaeological evidence is examined. While gymnasia were identified based on the existence of a peristyle courtyard alone in earlier research, I argue that only the combination of peristyle, exedra and loutron is sufficient evidence for the secure identification of a building as a palaestra. Second, the interrelation of gymnasia and general developments of Greek architecture and urban design are discussed. Since gymnasia were a vital part of urban landscapes from the 4th century BC onwards, the architectural shape of palaestrae is closely related to contemporaneous concepts of diversification of urban space, and social exclusiveness.