Using the process of rapid urbanization and indutrialization under-gone by Brasil as a background, the article discusses the existing mechanisms of financing urban development in the country's largest metropolitan area, Sao Paulo. By reviewing the institutional framework of urban planning and data concerning sources of financing urban development in Sao Paulo, the author singles out various problems that affect the metropoli's future development. Centralization of decision-making associated with and extremely unbalanced tax structure are, according to the author, depriving local administrations of the financial support necessary to provide urban infraestructure and services. Coordination of legal, institutional and financial mechanisms to ensure attainment of development objetives in regardered as essencial to ensure the proper solution to the problems generated by the failures of market mechanism to supply services in a metropolitan area, undergoing a rapid growth.