Rapid urbanisation increasingly affects small and medium-sized towns adversely in high mountain regions, which are especially vulnerable to socioecological challenges like depleting natural resources and increasing risk exposure to natural hazards. The case study of Leh town, located in the Indian Himalaya, reveals an array of diverse patterns, drivers, and challenges that characterise the process of mountain urbanisation. Our study is based on an integrated methodological approach using very high resolution multi-temporal satellite imagery, field mapping and social research data to track socioeconomic and political developments. A rapid spatial expansion of housing settlements on both, former agricultural and barren land along with a densification of built-up areas can be observed. Between 2003 and 2017, 9400 new buildings were constructed whereas in the 34 years before (from 1969 to 2003), approximately the same number of new buildings were constructed. The building area more than quintupled from 36 ha to 196 ha between 1969 and 2017. Consequentially, agricultural land loss through construction activities increased from 1% in 1969 to 8% in 2017. Urban growth in Leh is driven by administrative and infrastructure development, a booming tourism sector, the diffusion of urban lifestyles, and the region’s geopolitical importance. The emerging socio-ecological challenges are tackled by different local actors. Our findings raise questions on the consequences of such rapid urbanisation on urban and environmental governance, especially with regard to water resources and natural hazards, and we offer practical recommendations for sustainable town planning.