A European programme of workshops, schools, and exchange visits is targeted at the understanding, modelling and design of functional materials. Materials functionality is often based on phenomena that are poorly understood at a predictive level either because of inherently strong interactions (e.g. magnetism, ferroelectricity, superconductivity) or complex structure (e.g. composites, oxides, biomaterials), and increasingly both. Our proposal brings together different communities: materials scientists, experimentalists, and theorists. Together with an established (and US National Science Foundation - funded) programme, our European network will acquire an international dimension across North America and Asia.