Uganda is experiencing rapid urbanization estimated at an annual growth rate of 5.5% where Kampala has remained a primate city since 1969 growing at annual rate of 5.61%. With this growth rate, Kampala absorbs 40% of the national urban population and 4.9% of the national population (UBOS, 2002). Kampala’s growth and development is characterized by the sprawl into hitherto rural areas engulfing formerly satellite towns within a radius of 32 kilometers. The urbanized area has become metropolitan spanning approximately 386 square kilometers. But, the growth and expansion are associated with lack of infrastructure, social services and pose planning and environment problems. The challenge is how to address the problems through pro-active policy and concerted effort by the city authority, government Civil society and public. This research examined the relationship between population, development and environment in Kampala and its immediate environs for policy action that would promote sustainable urbanization and development of Kampala metropolitan area. Kampala is selected because of its strategic and functional roles as a commercial, industrial, administrative, social, economic and cultural hub of Uganda. The study combined several research methods that included secondary data from various reports, and policy documents dotted around in different agencies, which have tried to address the environment and development issues of the city. Remote sensing techniques and GIS were also utilized to spatially analyze the relationships between population, development and environment with a focus on housing, industrial development and how they relate to pollution, land cover change, challenges of waste management and sanitation in the metro area of Kampala. From the study findings, it’s apparent that Kampala is faced with environmental problems that are putting pressure on the existing infrastructure while the poor settlements are beset with environmental burdens that are deteriorating the well-being of the dwellers. As the environment deteriorates, so is the increase in poverty due to reliance by the urban poor on natural resources through urban agriculture, natural resource extraction, informal production and trade as coping strategies. To respond to these challenges, some policy recommendations are proposed to break the vicious circle of population, environment and poverty.