There is a close relationship between Economic Development and Urbanization. But this relationship is not always linear. It is also true for Bangladesh. Although urbanization has been occurring very rapidly for last three decades in the country, she is not getting the optimum agglomeration and spill over benefits from it. In contrasts, it has been facing various negative externalities like urban congestion, environmental pollutions, unplanned urban growth, widening the income inequality etc from rapid urbanization for last twenty years. The underlying reason is the lack of comprehensive urban development policies that could have incorporated the sustainable strategy both in urban and regional development. Responding to this problem, the government should take proactive structural and non-structural policy measures. To achieve this goal the formulation of integrated policy for urban and regional development is not enough; its proper and timely implementation must be ensured. In this context, not only the government but also other stakeholders like private sector, investors, civil society, citizen’s participation, and development partner’s assistance/cooperation are crucially important.