The informality of urban spaces has emerged as a critical concern in urban planning across many countries. This paper examines the urban planning and management policies designed to regulate these informal, or ‘gray,’ spaces. Our survey of these guiding and controlling policies reveals a variety of approaches used worldwide. However, the lack of a systematic classification for these policies has led to ambiguity and confusion concerning their types, nature, context, and functions. To address this gap, this study analyzes these guiding and controlling policies for informal space development. Utilizing a systematic review method, we identify five categories of urban planning and governance policies: Moderator, Controller, Protection, Intensifying, and Restraining. Despite the adoption of these policies, informal spaces continue to face complex land and housing-related challenges from various angles. An effective and integrated policy framework is needed to address urban development trends and these challenges. Our approach advocates for institutional development, co-production, and urban entrepreneurship, presenting a vision for the future of these spaces. By emphasizing their generative potential, this perspective can enhance the role and performance of informal urban spaces, ultimately leading to socioeconomic development and improved environmental quality.