This article aims to analyze the modernization of urban development and community-based management strategies of slum areas. Modernization of urban areas in Sangatta through the construction and development of new functions contribute positively to the process of urbanization and social changes. The development acceleration in Sangatta is characterized by a dualistic economy through the dominance of urban space by capitalist reproduction, conditioning marginalization and poverty because of non-optimal spatial articulation. This article used quantitative and qualitative approaches (mixed methods). The data were obtained through observation, documentation, and surveys using questionnaires on several respondents of Sangatta urban population. Modernization of development is parallel to changes in space utilization of Sangatta urban areas, conditioning the development of slum areas, urban poverty, and marginalized communities, because of helplessness and lack of access of the society on space reproduction resources and adaptation on the function of urban space in Sangatta.