Urban expansion management a strategically planned of urban areas, is vital to the sustainability ofrnthe community who live in both urban and rural community. The current global and local experience ofrnurban expansion creates multiple environmental, social and economic problems to the urban and ruralrnsocieties. Urban expansion management of large urban areas is an important issue in urban landrnadministration and management. Studies on these issues are, however, scarce especially with respectrnto the problems existing in the cities. Sustainable urban expansion management for urban center canrnsignificantly reduce costs of infrastructure, decreases air pollution, decreases time spent and cost onrntransport as well leads to enhancing the quality of life.rnThis study assesses the urban expansion management and its challenges in Mekelle city mainly inrnAyder sub city. This research employed mixed methods approach. Pragmatic knowledge claimsrncollection of both quantitative and qualitative data sequentially This research has assessed thernempirical-based evidence on the quantitative and qualitative dimensions of past, present and futurernurban expansion using GIS and Google-earth techniques and identified drivers behind urbanrnexpansion in conjunction with administrative boundary, structural plan and various socio-economicrnparameters.rnThe findings of the study indicate that, population growth and ceaseless housing demand;rnreclassification of urban boundaries/annexation; the increasing of land development for investmentrnzones and industrial parks; speculative-nature and informal settlements; economic growth andrnexpansion of roads and lack of full-fledged plans and failure to enforce planning laws were the majorrnfactors behind the urban expansion of the city. In addition, the findings indicate that the communityrnparticipation in urban expansion and in compensation is low. In relation to this, the amount ofrncompensation paid to the households was very little when compared to what the government hasrnreceived by transferring the land to lease. Therefore, a comprehensive urban plan addressing therndevelopment needs of the city neighboring-hood and transforming its hinterland, establishing rigorousrnrural land use planning and rural residential land registration as well as ensuring robust adjudicationrnsystem will minimize the means of illegal and excessive urban expansion. Furthermore, ruralrnresidential land registration reduces the speculative wealth creation and consolidating settlements thatrncontribute for the effectiveness of urban land administration and management.rnKey-Words: Annexation, urbanization, urban sprawl and compensation