Abstract: In recent years, urban poverty in Malaysia has been considered as an increasingly visible phenomenon due to impacts of urbanization. This study aims to assess the trends in urban poverty and urbanization in Malaysia during 1970-2012. The study also examines consequences of rapid urbanization and urban vulnerable group in the country. The study used empirical data on urbanization, household income, poverty, population at rural and urban level. The data were obtained from Economic Planning Unit (EPU), Malaysia and Department of Statistics, Malaysia. The findings reveal that there was a downward trend in urban poverty incidences. Poverty rate in urban areas decreased from 25.5% in 1970 to 1% in 2012. However, average monthly income of urban households is much higher (almost twice) than that of rural families which indicates a high income inequality in urban and rural level. The country experienced cumulative growth of urbanization during the last few decades. Level of urbanization was 34.2% in 1980 and reached to 71% in 2010. The country also observed a boom in urban population that swelled from 27% of total population in 1970 to 71% in 2010. Significant increase of urban population in a short span of time creates various problems including high cost of living, crime, social problem, environmental deterioration, unemployment and poverty. Therefore, to tackle the problems, it is urgently required to identify the location of poor in city, differences between poor areas, effectiveness of specific programs as well as design and best practice of urban poverty reduction programs and policies.