Housing transformation is a commonly practiced phenomenon, especially in government-provided housing all over the world. In Bangladesh as well, the government-provided rehabilitation housing, like Ashrayan projects, experiences transformation of physical elements according to the dwellers’ needs. This physical transformation of housing indicates an existing gap between the housing provision process and users’ needs. These transformations also reflect many unidentified indicators like traditional dwelling patterns, building materials, flexibility, livelihood options, and accommodation of the dwellers’ next generation, etc. that could be helpful to meet the noble vision of Ashrayan projects. A critical understanding of the housing transformation process will help to formulate a more user-centric rehabilitation approach. The aim of this study is to investigate the process of housing transformation and identify decisive indicators causing the transformation in the development and construction phases of government-provided rehabilitation projects. The rehabilitation project of Bhandarpara Ashrayan, in Khulna, a southern district of Bangladesh, was chosen as the case of this study. The project accommodates 260 households in 26 barracks. Among the population, 33 households were chosen as samples for morphological analysis using qualitative techniques. The finding implies that users gradually altered the government-provided housing units. Direct labor, locally available materials, and a self-help approach without the need for building designs or authorizations were well-used indicators in the housing transformation process.