Mike and his mates have been celebrating for 11 hours, and by the time they grab my arm and coax me onto the dance floor they are merry indeed. We're in a mildly tawdry, vaguely murky place called Club Hollywood on a Saturday night in Tallinn, and if their fancy footwork is not quite as impressive as they think, it doesn't really matter — not with the pulsing lights, throbbing dance music and storm-tossed sea of fake-ID girls and boys all around us. The group of 10 guys I'm dancing with are the celebrants of "Mike's stag do" — a few of the thousands of weekenders who have flown in to the Estonian capital in the past 24 hours. Mike & Co., a jumble of university chums and work colleagues from London, pour beer over their sweaty heads and clammy shirts and laugh and laugh as I wave and surf my way toward the door.

A city of fewer than 400,000, Tallinn looks out over the Gulf of Finland, and it has turned its back on its Russian-dominated past and set its sights on Scandinavia. Over the centuries it has weathered occupation by the Danes, Germans, Swedes and, until 1991, the Soviets. But tonight it appears to be occupied by sleek clubbers sprung from the pages of Wallpaper*. They were out in force by 8 p.m. in the old town; on cobbled streets lined with ice cream-colored buildings, they milled about with the haze of liquor upon them and the night laid out before them. The warm evening air was full of distant music, the steady hum of conversation spliced with shrieks of raucous girlish laughter, and the promise of romance, or at least sex.

Over the past couple of years, Tallinn has emerged as a new capital of cool, in the vein of Prague, Lisbon and Zagreb. It receives some 2.7 million visitors a year, 60% of them Finns floating in on 40 "booze cruises" a day (beer costs half as much in Estonia as it does in Finland). But Tallinn is rapidly gaining a reputation farther afield; more than 60,000 Britons came last year, for example, and the numbers are increasing. The flights in are cheap enough (as low as €65 from Paris) to fill the cafés and nightclubs, the laid-back streets and acres of lush parkland, the beaches that serve as perfect chill-out zones after a hard night on the tiles. "People expect this old city from the Soviet Union to be cold and dark," says Helena Tshistova, marketing manager for the city's tourist office. "So I think they are surprised to find it is quite the opposite."

If Tallin is special — and it certainly feels special tonight — it may be because the people in charge here are young. Maret Maripuu, the chairman of the City Council, is 30, and one of the deputy mayors, Jüri Ratas, is 26. A leading figure in the town's revitalization is hotelier Tarmo Sumberg, 41. In the past year he has opened three hotels, two in Tallinn and one on Saaremaa Island, just off the coast. The first of Sumberg's hotels was the Three Sisters, a five-star boutique hotel in the heart of the old town. Its 23 rooms are built into 600-year-old merchant houses, though the interiors are strikingly contemporary. But he is especially proud of his second effort, a two-star inn that offers "bed and beer." "All guests receive free beer on arrival," he says, clearly delighted with the concept.
Tallinn isn't all late-night raving. On Saturday afternoon, I meander into Kehrwieder, one of a new generation of coffeehouses spreading across the town in a revival of the café culture that dominated the city in the 1930s. Kehrwieder is a cavernous, deliciously dark hangout with an arty clientele — the kind of place that can easily swallow up an afternoon. Where the old cafés of Tallinn were little more than pit stops, the nouveau coffee drinkers take their time; the coffee shops themselves serve as popular alternatives to clubs and bars.

One of the most fashionable café-bars is Kohvik Moskva (Café Moscow), on the quiet square of Vabaduse Valjak. Here you can happily sit outside with friends or a book and a bottle of wine and let the evening drift by. Or you can launch your night with a stiff drink and something to line the stomach, as Jim and his friends, over from London, are doing tonight. "It's just so chilled here," says Jim, who is already a couple of beers into his evening. "Last night we went to a bar in the park — it's like you're sitting on a sofa in the park." He looks down at his plate then grins back up at me: "Have you tried the shrimp salad?"

Traditional Estonian cuisine — marinated eel, tongue with horseradish, sauerkraut stew — is not a huge selling point for Tallinn. Those dishes are still served at old-school restaurants like Eesti Maja, but the new Tallinn offers more international flavors. I stop off at one of the city's many sushi bars for a fortifying California roll and notice that the waitresses have perfected the disdainful air one expects in the capitals of Europe. Even so, the average cost of dinner for two in Tallinn is just €30, including wine.

The pinnacle of Tallinn's restaurant scene is Pegasus, a minimalist Scandinavian place that draws a louche, fashionable crowd. The atmosphere of card-carrying exclusivity continues at places like Club BonBon and Club Privé, where just about everyone seems to be coming from, heading to or whispering about a club called R.I.F.F. The brainchild of Finnish restaurateur Sedu Koskinen, R.I.F.F. has the sort of sophistication Club Hollywood can only dream about — its elegant design and sense of wealth lend it an aspirational air. This may be Tallinn's future, for it cannot be long before the city is bombarded with foreign investment, multinational corporations and food chains. But for now, there remains a youthful verve and excitement to this historic city. The kids are still in charge.