Rapid Urbanization has led to the expansion of cities with changing land use and occupation. These changes have transformed the city hinterlands into Fringe areas / peri-urban settlements. In India, city fringe areas are largely neglected in policy and practices (Randhawa and Marshall, 2014) as they do not belong to any municipal limit and therefore migrants find it easy to settle in these areas. These Fringe areas face serious problems due to inadequate land-use planning and governance. The aim of the research is to study the transformation of historical settlements infringes of Aurangabad city. By detailed studying the settlement history, character and land use pattern, issues and challenges are listed. Based on these listed Issues, the paper highlights the Solutions and Guidelines for the cautious development of these Fringe areas.