The suggested article analyzes the roots, evolution and contemporary development of diplomacy at the turn of 20th - 21st centuries. The actuality of the problem consists in the fact that in modern world the boundaries between domestic and foreign policies are constantly disappearing. Issues which were considered to be as an internal matter of one or another country, may be effectively addressed nowadays only on international level, using efforts of a great number of international actors. In democratic countries in contrast to authoritarian regimes, we can see a considerable dispersion of power and decision-making centers. Diplomats of these countries are not always confident if their activity will gain the support of parliamentary institutions and local authorities of their parent countries. All these factors lead to the necessity of study the peculiarities of modern diplomacy and its effectiveness in 21st century. The research is based on systematic method, which is manifested in alignment and consistency of the presentation of the material on the basis of analyzed sources. Another important method applied is a historical method by means of which chronological order of the development of modern diplomacy is systematized. The article emphasizes the essence of diplomacy, its basic aims and functions, political and non-political tasks of diplomatic activity. Diplomacy is regarded as set of scientifically established methods and means, the art of conducting negotiations and concluding agreements, the art of realizing state foreign policy goals. The research highlights a new approach to the analysis of public diplomacy regarding it as a practical activity and important mean for achieving strategic purposes in the international arena in the process of active globalization at the beginning of 21st century.