This chapter presents a brief overview of the history, state and future potential and challenges of urbanization in Bangladesh. The role of cities in enhancing economic growth has inspired pro-urbanization policies in many less developed countries including Bangladesh. The unitary form of government, lack of spatially based policy and trade liberalization in a globalized economy gave rise to a Dhaka-oriented migration causing rapid urbanization and primacy in the subsequent period. During the British colonial period, East Bengal’s decline in importance and overarching commercial interest of the rulers precluded economic development and urbanization in this region. The notion of ‘urban’ is constructed on the non-ubiquity of resources and economic activities across space, and as such most descriptions of urbanization focus on the economic growth potential associated with it. The pressure on existing urban facilities and natural amenities owing to the density rise in major cities and bourgeoning production interest is symptomatic of the negative economic externalities to the pre-existing population.