Plenty of things are being discussed about the compact cities as a sustainable urban form but has anyone discussed about any adverse effect of these cities to the environment? The local warming effect due to changes in urban fabric can be equally problematic as global warming because it is a major contributor for rising up the atmospheric temperature. This research focuses on urban heat island effect, a form of urban micro-climate, and suggests some mitigation measures for this phenomenon. As the topic is new for Nepal and most of the developing countries, mostly qualitative analysis is done based on literature reviews. The study carried out during the research in Kathmandu showed the presence of urban heat island affect and its growing trend. Therefore, the main objective of this research was to develop some guidelines to minimize as well as adapt the transitional city, Kathmandu, to this increasing urban heat island effect.