Sustainable urbanization policies and strategies are posited as a major tool by which to achieve the sustainable development of growing towns and cities. A major challenge for sustainable urbanization policies and strategies is how to address the complexity of urbanization, especially the ongoing growth of informal settlements and slums in developing countries. It is acknowledged that those living their lives in such housing and settlements suffer greater levels of spatial, economic and social exclusion from the benefits of urbanization that other segments of the urban population. Using a case study approach, this paper examines the range of challenges associated with the growth of informal settlements and slums, seeking to understand how they are positioned via upgrading policies in city urbanization plans and strategies in Indonesia’s third largest city, Bandung. The research finds that there has been a shift in kampung and slum upgrading policy from in-situ solutions to vertical housing towers which appear incompatible in accommodating the way of life practiced in kampung adaptive urbanism contexts. The manner in which city governments manage informal settlements and slums by seeking to reshape and restructure the lifestyles of residents to align with formal market measures has a major impact on existing disadvantaged communities. The paper concludes with a call for greater leadership, political commitment and recognition of contextual responses when developing slum upgrading policies set within urbanization policies and strategies branded as sustainable.