This paper describes the process of urbanization and land use change in the urban ecosystems of the National Capital Region (NCR) of Delhi, India. Two types of land use change are considered—from natural to urban and from agricultural to urban. Both types are explained in terms of economic variables known to be drivers of change. A panel data method was used, and economic variables were combined with GIS-based information on land use change during 1986–2004 for 11 administrative units of the NCR. The results suggest that investment in the construction sector plays a major role in converting the land from natural to urban areas, while differences in land productivity seems to be the major driver for change from agricultural to urban uses.