The general objective of this study was to assess the challenges of controlling the development of informal settlements in Arusha city council. Ngarenaro Ward an informal settlements was used as a study area. Both primary and secondary data were collected. Primary data were collected through household survey, key informant interview and field observation. Descriptive statistical and content analysis were employed in data analysis. The results showed that there are various driving causes of informal settlements as scarcity of land resource, long government process of providing planned and survey urban land or plots, level of education and income level differences. Other driving factors were poverty, ineffective housing policy, trusted local institutions and urbanization. Plot survey, regularization progammes, tittle deed provisions and squatter upgrading projects are strategies initiated by government planning authorities to reduce informal settlement and economically empower the poor. Upgrading of informal settlement is part of the national housing programme, which aims to address the country’s housing challenges. In minimizing these challenges like change of land use values and uses, rapid urbanization, high planning standards, land laws and regulation and lack of resources, Arusha city council has been taking different measures to reduce informal settlements as ongoing preparation of Arusha Master Plan, Poverty reduction and Business Formalization projects.