Rapid urbanization demands the expansion of infrastructures. The land is a prerequisite to expand those facilities and services; however, urban lands are underutilized, fragmented into smaller pieces, and higher in price. This makes land acquisition lengthy, costly, and ignites social and political issues. Since land acquisition for infra projects demand higher upfront project cost that increases project cost, so this research examines the effectiveness of the innovative method to supply urban land for housing and other infrastructure without land acquisition. This study illustrates the concept of land readjustment with the case study from Nepal, which is implemented in partnership with a private partner (landowners). The study also examines some challenges in project implementation and provides a recommendation for speedy implementation. The result shows that major beneficiaries are both landowners and the government. The value of land increases for landowners, and the government can value capture since the public goods such as roads, drainage, water supply, parks, and other facilities are provided through landowner’s contribution. The self-financing, innovation and cost-recovery characteristics of land readjustment make it an excellent example of public private partnership (PPP) at a smaller scale for sustainable urban development. The findings from this study are important for experiences sharing in the regional context, and the issues identified draws the attention of further researchers and policymakers.