Kagera is one of the 22 regions of Tanzania, which has witnessed a decline in HIV prevalence from 24% in 1987 to 4.7% in 2009 in the urban district of Bukoba. The aim of this study was to study the association between male circumcision and HIV infection in an urban district with an observed decline in HIV prevalence. We conducted a population-based cross-sectional study of a representative sample of 1497 males. The HIV testing was performed using enzyme-linked immunosobent assay (ELISA) antibody detection tests. Using logistic and multivariate regression analysis we assessed the associations between HIV status and prior circumcision while taking other risk factors into account. Individuals who were uncircumcised were almost two times more likely to be HIV positive compared to individuals who were circumcised (OR=1.9, 95% CI: 1.3-2.9). This association remained statistically significant even after adjusting for potential confounding factors such as age, marital status, occupation, level of education, condom use and number of sexual partners (OR=1.7, 95 % CI:1.03-2.6). The study concludes that male circumcision has a significant protective effect against HIV infection and that policy makers should strengthen existing male circumcision programmes to prevent new HIV infections.