Urbanisation is a pivotal demographic transformation that characterised the twentieth century, serving as a crucial indicator of modernisation intimately intertwined with economic growth and development. Significantly, in its journey as a developing nation, India is witnessing a rapid surge in urbanisation, a trend that surpassed expectations, as evidenced by the 2011 Census. The surge in India’s urban population is primarily attributed to a combination of net rural–urban reclassification and rural-to-urban migration. It is essential to recognise the distinctive nature of Kerala in this context, as the state diverges significantly from the patterns observed in other regions. The urbanisation unfolding in Kerala is not confined solely to designated towns and cities; instead, the entire state portrays a nuanced urban–rural continuum. In this study, an exploration is undertaken to dissect the trends and patterns of urbanisation in Kerala, delving into its unique characteristics and associated challenges based on data provided by the Census of India. Regression analysis is used to determine the factors that contribute to Kerala’s urbanisation, which shows that urbanisation process is influenced by a complex interplay of financial, economic and demographic factors. Over the decade, banking has become a crucial driver of urbanisation, highlighting its growing role in supporting urban growth and development. In contrast, the significance of investment in small-scale industries/micro, small and medium enterprises has diminished by 2011, suggesting shifts in the economic landscape and pointing to the rising importance of services and remittances as sources of urban expansion. Household dynamics, consistently significant in both years, emphasise the critical role of population changes and family structures in shaping urbanisation trends. Despite the continuous rise in urbanisation rates, there persists a noticeable sluggishness in development, especially regarding the provision of essential amenities. This aspect necessitates focused policy attention to address the challenges accompanying Kerala’s evolving urban landscape. JEL Codes: O18, R23, R12