Despite the new urban planning thinking and legislation evolution since 2016 towards sustainable development, in practice, there is a limited legal framework for planning which makes it more challenging for local governments. As a result, two main scenarios have taken place in the Metropolitan Area of Lima: the unsustainable urban growth at the metropolitan level, and sustainable urban development building at the local level. In an attempt to contextualize the current state of Lima’s territorial planning, the research captures the nature and trajectory of this contradiction to conduct the various trade-offs inherent in sustainable urban development. The results show that urban planning unawareness, and fragmented governance without continuity across government periods, have led to distrust at the metropolitan level diminishing its urban development towards social and environmentally sustainable development. However, integrated planning and collaborative governance with stakeholders enabled the strengthening of resilience with risk mitigation in informal urban settlements at the local level. The research concludes that new transformations call for new behaviors. Consequently, appropriate collaborative governance becomes a collective power for sustainable urban development growth.