Marking the origin and forming first layer of any urban settlement, urban cores/walled cities, remain different distinct and unique. Defining, history, culture and social fabric of the local communities, walled cities are invariably revered and valued. Showcasing the valuable heritage and housing iconic religious and cultural institutions, core areas/walled cities are considered as heart and soul of any settlement. Despite housing large population in a small area and making large contribution to economy and employment, core areas/walled cities , are reeling under enormous stress and strain, generated by rapid urbanization,uncontrolled physical growth /expansion and induction of large number of vehicles in the core city.In the process majority of core areas/walled cities are facing slow damage and destruction of core values, built heritage and existing culture. Lack of appropriate mechanism of growth and development, absence of any policy framework besides lack of capacity, capability, expertise, resources, skill and manpower available with the agencies involved with planning, development and management at the local level, are causing enormous damage to the history, culture and social fabric of the local communities. Looking at the role,relevance and importance of the core areas/walled cities, paper tries to identify critical issue which are responsible for the damage and destruction of the valuable history, culture and the heritage in these areas and make suggestions for its rational development. Tracing the history of the origin and growth of the Walled city of Amritsar, paper tries to identify the developmental challenges faced by the city, identify reasons for such challenges and suggest a framework/ options, which can be leveraged for making walled city of Amritsar, economically efficient, socially/culturally vibrant,physically livable and environmentally sustainable besides becoming a repository of valuable history and heritage.