US city is unusually grandiose overlooking river (3,5)
I believe the answer is:
san diego
'us city' is the definition.
(San Diego is a city in California)
'unusually grandiose overlooking river' is the wordplay.
'unusually' is an anagram indicator.
'overlooking' is a deletion indicator.
'river' becomes 'r' (abbreviation for river).
'grandiose' with 'r' taken away is 'gandiose'.
'gandiose' with letters rearranged gives 'SAN DIEGO'.
'is' is the link.
(Other definitions for san diego that I've seen before include "Calif. naval base" , "Southern California naval base" , "US city" , "City of S. California" , "Agonised over the Californian city" .)