Researchers refer to it as an oxymoron. However, a stark reality is, Delhi has 135 urban villages as per latest reports. With rapid urbanization, Delhi stood at 17 million (2011), a growth rate of 55% (1991-2011). Earlier, there were scattered settlements (‘abadi’-deh) with farmlands (khet-khalihan). These farmlands were acquired for construction of planned colonies. The village settlements were left and its inhabitants were exempted from development control regulations. This unguided freedom led to unplanned construction and haphazard growth. The first part of the paper researches on the genesis of urban villages. The first master plan of Delhi only acquired agricultural land. The ‘abadi’ areas were left and the rural built forms were protected by a boundary called ‘Lal Dora’ (Red Chord). Within these boundaries the ‘urban villages’ emerged over time. These villages were not subject to any developmental control nor were they connected to the urban infrastructure networks resulting in uncontrolled growth. The second part of the paper presents status and major issues of urban villages; viz. high density, inhabited by lower income groups and in-migrants aspiring for a livelihood, unplanned, lacking water supply and sanitation with narrow streets. The study highlights these conditions from urban villages in Hauz Khas, Kotla Mubarakpur, and Mohammadpur. The third part of the paper highlights the reasons behind the present scenario. It identifies major fallacies from policy makers, the response of the users as well as, the builders. An expert report identifies, the major slip was the way land acquisition and compensation package was worked out. Villagers were deprived of their agricultural land and space for their cattle. Moreover, the compensation at government rates got over soon. Inhabitants were forced to seek alternative livelihood like small business, shops. The pace of land acquisition outweighed speed of development and authorities could not protect these unused lands. Large scale encroachment, even unauthorised colonies grew, ftirther compounding the problem. The last part of the paper does a comparative analysis of three urban villages, examines some of the development approaches and user preferences and tries to identify different stages of transformation of urban villages. An approach to improve mobility and accessibility in one of the urban villages is proposed.