After Industrial Revolution and changes in the world's manufacturing connections, the relationship between human and environment has dramatically been changed. Being in a strategic status, the rural population met the proper capacity to be placed in another concept of living called "the city". Like many other developing countries, the changes in Iran's urbanization process were formed after the land reform and emergence of assembly industries, particularly with the increasingly prominent role of the oil industry which fundamentally changed the rural-urban relationships and caused an unbalanced distribution of urban-rural revenues and pushed more the rural-urban migrations. Kermanshah, as one of the provincial cities in the western part of Iran, has been selected as the case study of this research to study the challenges of urban development in Iran through documents analysis. The results show that Kermanshah faced major challenges of spatial inequality in urban development as the results of rapid urbanization, rising urban poverty and lack of wellgoverned and managed urban areas