Shrinking cities are an essential strategy in developed countries with population declines, but they also create many new problems. In shrinking cities, sustaining their current urban functions into the future is hard, and they are expected to face city collapse. Conversely, the popularity of telework shows the possibility of maintaining urban activities without shrinking. Therefore, to analyze long-term changes in future urban forms and functions, it is necessary to consider the impact of future technological innovations, such as ICT, on urban activities, too. Therefore, this study focused on telework diffusion, which is one of the technological innovations, and analyzed and evaluated its long-term impact on shrinking cities using the land-use and transportation model "MARS." Consequently, it was clarified that even though telework diffusion is difficult to sustain in shrinking cities, the government and municipalities must respond to these negative aspects as telework becomes more widespread for future sustainable shrinking cities.