One of the challenges confronting cities in the developing world is social exclusion and marginalization of the poor. This has been observed in terms of large scale informalities in settlements growth, employment and livelihood activities. Inadequate infrastructure, diminishing access to basic services and livelihood opportunities are increasingly precipitating social exclusion in cities. In Tanzania, the policy shift from social welfare to liberal economies is contributing to marginalization and subsequently, exclusion of poor households in accessing basic services. This paper discusses the social dimension of sustainability viewed from social inclusion point of view. Eight major urban centres in Tanzania are being examined. The data collection methods included household interviews, review of documents, workshops and group discussion. Results show that with the exception of access to education and health services, cities are poorly performing in terms of access to water supply, income versus cost of living, employment, services to the handicapped and ownership of properties by sex. Quality of life elements such as sanitation and urban informality also remains below average. While informality in cities accounted for 66 percent (in terms of built up areas), access to onsite potable accounted for only 36.9 percent. On the bases of these findings, it is recommended that strategies such as cross subsidization and addressing informalities should be developed and implemented with a view to ensuring social inclusion in cities.