Urban factories seem to be a promising approach to satisfy the needs of a population in urban areas and to create a close proximity with local stakeholders (customers, workforce, potential service suppliers, etc.). This paper presents a state of the art on urban factories to explore the various definitions of the concept and to identify the current gaps in the literature. Indeed, various types of urban factories have been characterized with various levels of urbanity, motivations and value chains. From this review, the authors propose a new typology of urban factories with different value chain profiles. This would be the initial step for implementing urban factories at the product and process design stage according to the profile of the value chain. The outcomes of this study are a list of definitions and case studies that will help cover the literature gap, and a preliminary projection into the design level. The discussion highlights the advantages and challenges of urban factories, and explores the sustainability aspect in the presented typology. The emergence of this type of urban factories requires both investment in innovative mobility and construction concepts, and the city’s administrative support.