The authors study the effect of development in Tembalang post relocation of the Diponegoro University in 1995, and establish that social, economic and physical changes occurring demonstrate establishment of gentrification in the city. The study also assesses the effect of gentrification. The study uses quantitative and qualitative methods, applied on 130 dwellers as sample unit, and utilizes Discriminant Analysis to classify the gentrification characteristic, both using questionnaire and observation. The authors conclude that development in Tembalang demonstrates gentrification that is identified based on social change, changes in population, tendency of segregation, and area's revitalization. Socially, gentrification has made Tembalang become more crowded; differences in dweller's behaviour of home rented-newcomers and homeownernewcomer and declining level of morality in Tembalang's youth are also studied. Economically, effects of gentrification is demonstrated in over 65% population as economic condition have improved due to increase of business opportunities, rapid growth in trade and service activities in the main street corridors. The authors also show that gentrification leads to increased congestion and increased criminal activities. Physically, gentrification has decreased available green space although improvement in aesthetics in terms of architecture, cleanliness, and building permanency are observed. Disparity in infrastructure services distribution is also observed on account of gentrification. 1995 Diponegoro Tembalang 130 Tembalang Tembalang Tembalang 65