Elderly relative with girl in Spanish city (7)
I believe the answer is:
granada
'spanish city' is the definition.
(Granada is a city in Spain)
'elderly relative with girl' is the wordplay.
'elderly relative' becomes 'gran' (short for grandmother).
'with' means one lot of letters go next to another.
'girl' becomes 'ada' (girl's name).
'gran'+'ada'='GRANADA'
'in' is the link.
(Other definitions for granada that I've seen before include "sunny city" , "City of Andalusia" , "Spanish city, site of the Alhambra" , "Andulasian city" , "car in > Spanish city" .)