With a population of over 172.8 million Pakistan is currently worlds 6th largest country. Punjab contributes about 56% to its total population. Population of Punjab and its districts is growing rapidly. Due to variable rate of fertility the rate of population growth is also variable in urban and rural areas. The rate at which population of the Punjab is growing as a result of natural increase is a matter of national consequence and, therefore, needs an appropriate look. In this regard, study of fertility levels and differentials attains the status of basic ingredient. The study in point undertakes fertility differences between population groups with respect to place of residence using primary and secondary data. Fertility levels for each of the rural and urban stratums of population have been computed and compared to point out the differences. Census data have been used to compute fertility levels and differentials at district level and for the entire province. Then the study has been supplemented by field survey data of sample district Bahawalpur (Punjab). This helped to reach the precise differences of fertility amongst rural and urban populations. Notable differences in the rate of fertility between rural and urban populations have been found. Significant inverse correlation between proportion of urban population and fertility rate lead to arrive at the notion that differential in reproductive behaviour between the women of two polar type community stems mainly from differences in socio-economic conditions between the rural and urban areas.