The purpose of this study is three folds. Firstly, to review the historical development of “Gated Communities”; and the role played by them in bringing about social integration or otherwise in the urban fabric of developed and developing countries. Secondly, to study the impact and challenges of gated communities for sustainable development. Thirdly, to undertake a case study of gated communities in Lahore (Pakistan) with a view to explore their positive contribution or otherwise towards the achievement of social cohesion and sustainable development. Human ecosystem is not only getting transformed at a geometric pace but its various determinants, such as peoples’ demography, culture, social organization, psychology, environment and technology, are also changing acceleratively at differential rates. All this is leading to the formation of a global village, or to use Friedman’s terminology, the world is becoming flat! As a consequence, some of the socioeconomic and spatial concepts are becoming outmoded, and still others are undergoing drastic transformations to suit the new realities of the flattened world.Gated communities have likewise been undergoing drastic transformations both in their functions as well as form during the primary, secondary and tertiary civilizations. During the primary civilization most of the towns themselves were gated because the physical development pattern was nodal due to low level urbanization. During the secondary civilization, metropolitan or aggregative physical development got flourished due to heavy rural urban shift and the communities started overflowing their gated boundaries. During the tertiary civilization, the physical development pattern became diffusive which resulted in rurbanization or the megapolitanism. During this era, the gated communities started to immerge as islands of gated neighborhoods on the vast metropolitan/megapolitan fabric. The location, size, morphology and functions of gated communities have been and are still undergoing transformation as the human ecosystem is advancing towards the global village. As a consequence, they have been and are variously impacting and posing new challenges for social cohesion and sustainable development. This explorative study is comprised of five parts. Part one is introductory and provides a historical overview of the development of gated communities. Part two goes into the dynamics of socioeconomic and physical changes and their future prospects. Part three goes into their facilitative or debilitative role in the formation of socially integrated communities. Part four explores the impact and challenges posed by these communities in the context of sustainability. Finally, part five highlights the salient conclusions and recommendations of the study.