Pakistan is currently navigating an unfavorable urban trajectory. Poor urban management is preventing it from realizing the full promise of urbanization in the form of improved prosperity and livability. City growth is poorly planned, housing and service delivery lag badly, and city residents are, increasingly, exposed to environmental hazards. These conditions arise from a weak, ineffective, and unsuitable urban management and financing system that has regressed rather than strengthened over time. For Pakistan to harness the potential of its urbanization to lead it out of poverty, boost national productivity, and act as an engine of growth, the institutional and fiscal architecture of urban management and local government requires fundamental reform. The current system must be empowered by a more coherent, accountable, and capacitated structure that gives municipal institutions functional responsibility for the built environment and key infrastructure sectors (water, sewerage, solid waste, roads, and drainage, among others), within geographical jurisdictions aligned with the actual population and spatial boundaries of Pakistan's evolving urban system. And these institutions must be anchored to a fiscal and financial system that can generate and effectively spend the resources necessary for sustainable urban development, while also encouraging private sector involvement in municipal service provision. To achieve this, concerted and sustained action is needed toward decentralization reforms at both federal and provincial levels.