Urbanization is a process of urban growth due to shift of population from the rural areas to cities and natural growth of population within the cities. It has multiple implications on socio-economic development and environmental degradation. As cities spread in its surrounding areas, economic activity increases. Gwalior metropolitan city is the major centre of cultural, educational and socio-economic development in the central India. Along with its socio-economic importance, the city is passing through the menace of all forms of environmental pollution. Thus, the environmental and health quality is critically low. This study examines all aspects of population growth, socio-economic development and environmental implications of urbanization in Gwalior. A case study of slums in Gwalior was conducted and suggestions are given for optimal development of Gwalior metropolitan city.