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Identification of suitable site for urban development in hilly areas is one of the critical issues of planning. Site suitability analysis has become inevitable for delineating appropriate site for various developmental initiatives, especially in the undulating terrain of the hills. The study illustrates the use of geographic information system (GIS) and multicriteria evaluation (MCE) technique for selection of suitable sites for urban development in Mussoorie municipal area, Dehradun district, Uttarakhand. For this purpose Toposheet and IKONOS satellite data were used to generate various thematic layers using ArcGIS software. Criteria using five parameters, i.e. slope, road proximity, land use/land cover, land values and geological formation were used for site suitability analysis following land evaluation. The generated thematic maps of these criteria were standardized using pairwise comparison matrix known as analytical hierarchy process (AHP). A weight for each criterion was generated by comparing them with each other according to their importance. With the help of these weights and criteria, final site suitability map was prepared.