High-density urban development is promoted by both global and local policies in response to socio-economic and environmental challenges since it increases mobility of different land uses, decreases the need for traveling, encourages the use of more energy-efficient buildings and modes of transportation, and permits the sharing of scarce urban amenities. It is therefore argued that increased density and mixed-use development are expected to deliver positive outcomes in terms of contributing to three pillars (social, economic, and environmental domains) of sustainability in the subject themes. Territorial quality of life (TQL)—initially proposed by the ESPON Programme—is a composite indicator of the socio-economic and environmental well-being and life satisfaction of individuals living in an area. Understanding the role of urban density in TQL can provide an important input for urban planning debates addressing whether compact development can be promoted by referring to potential efficiencies in high-density, mixed land use and sustainable transport provisions. Alternatively, low-density suburban development is preferable due to its benefits of high per capita land use consumption (larger houses) for individual households given lower land prices. There is little empirical evidence on how TQL is shaped by high-density versus low-density urban forms. This paper investigates this topic through providing an approach to spatially map and examine the relationship between TQL, residential expansion, and densification processes in the so-called NUTS2 (nomenclature of terrestrial units for statistics) regions of European Union (EU) member countries. The relative importance of each TQL indicator was determined through the entropy weight method, where these indicators were aggregated through using the subject weights to obtain the overall TQL indicator. The spatial dynamics of TQL were examined and its relationship with residential expansion and densification processes was analysed to uncover whether the former or the latter process is positively associated with the TQL indicator within our study area. From our regression models, the residential expansion index is negatively related to the TQL indicator, implying that high levels of residential expansion can result in a reduction in overall quality of life in the regions if they are not supported by associated infrastructure and facility investments.