India had a highly developed urban culture approximately 2500 years ago. This country witnessed many phases of urban development and decline. Due to its geographical and socio-cultural diversity, remarkable spatial variations in the level of urbanization can be noticed in India. Hill states are generally characterized by low level of urbanization. In this study, trends of urbanization from 1971 to 2001 have been examined in context of Himachal Pradesh. Some components of urbanization e.g. size and growth of urban population, structural pattern of urbanization, distribution of towns, level of urbanization etc. have been taken for the analysis. Observations reveal that growth of urban population is very low in the state and it has always been a least urbanized state of India since 1971. There is preponderance of small towns and emergence of large number of towns is the results of administrative exigencies.