This paper was the first selected paper for the European Microcredit Research Awards 2010. Being sustainable over the long term is one of the main goals of European Microfinance Institutions (MFIs). This paper analyses the factors that influence the sustainability of European MFIs. A better understanding of these key factors will enable MFIs to improve their performance. It also looks at the dichotomy between Western Europe and Central Eastern Europe in terms of institutional characteristics. The methodology applied in this paper combines factor analysis and a multiple linear regression.