The study illustrates the use of Geographic Information System (GIS) tools and numerical Multi-Criteria Evaluation (MCE) techniques for selection of suitable sites for urban development of a hill town. This study was conducted to identify suitable sites for urban development of a hill town, Nahan using GIS-based multi-criteria evaluation of slope, road proximity, land use, land values, soil and geomorphology factors. Merged spatial data (Cartosat-1 & LISS-IV) and six thematic information layers were analyzed using ArcGIS 9.3 software to identify suitable areas in Nahan town. It focuses on GIS based Overlay Weight age Average (OWA) Sum and Weighted Linear Combination (WLC). The undulating terrain, steep slope, varied soil depth and high building cost give the impression to find out suitable sites for urban development in the Nahan Town. In this study six factors (slope, road proximity, land use, land values, soil and geomorphology) were identified for criteria evaluation. Different thematic information layers were generated using visual interpretation of satellite data for each variable displaying site suitability measured on an ordinal scale. With the generated criteria, maps were standardized using the pair wise comparison matrix method. Weights for each criterion are generated by comparing with each other according to their importance. Criteria weights and maps were combined using OWA and WLC. Pair wise comparison matrix indicates weights for slope (=0.41), road proximity (=0.26), landuse (=0.15), land values (=0.09), soil (=0.06) and geomorphology (=0.03). Consistency Ratio, (CR =0.0117) <0.10 indicated a reasonable level of consistency in the pair wise comparisons. The final suitability map was obtained from both weighted sum overlay and Spatial Analyst Tools covering an area of 3.6 sq. km. After suitability analysis it was found that from the available area 0.1157 sq km falls under very low suitable, 1.6835 sq km under low suitable, 1.2090 sq. km under moderately suitable, 0.3663 sq. km under high suitable and 0.1248 sq. km under very high suitable. The result shows that highly suitable areas for urban development is either agricultural or forest type.