This paper describes trends in urbanization in Mongolia, identifies major factors that affect the process of urbanization, and measures the effects of urbanization and population distribution on socioeconomic development. The analysis relies on census data for 1969, 1979, and 1989. At independence, in 1911, Mongolia had only one city, the capital city. Urban growth did not begin in a major way until the 1950s. Mongolia is currently divided into 21 administrative units: 18 provinces and 2 autonomous cities. Each province has a capital. There are also rural districts with administrative centers. By 1989, all provinces had over 10,000 population. About 50% of the population is now urban. Each of the three major cities has over 50,000 population. Population growth in urban areas during 1969-89 was three times the rate in rural areas, but the pace of growth slowed during 1979-89. Housing is typically formal government housing or the traditional felt tent. Tent encampments surrounding major cities are similar to shantytowns in other developing countries. Occupants of tents have gainful employment, and the municipal government regulates the rent-free land and plot layouts. Only the capital city had population over 100,000. Only one city in 1969 had population between 20,000 and 50,000. In 1989 there were 19 cities with this population size. Most were centers in provinces. Population living in cities of 20,000 to 100,000 rose from 4.4% of total urban population in 1969 to 31.7% in 1989. Urban population living in cities with under 20,000 people declined during this period from 44.9% to 21.3%. Population declined only slightly in the capital city, where in-migration accounted for 25% of growth. Small urban places grew due to expansion of production activities in collectives. Policy decisions of the government were the most influential in influencing population distribution.