In 1861, the sugar industry belonging to Mangkunegaran Palace, Surakarta, was established. The sugar industry was named the Colo Madu Sugar Factory located in Krambilan Village, Malang Jiwan District, Mangkunegaran City. Today, this area belonged to Karang Anyar Regency. The village was initially rice fields and the place of sugar industry in Java made from coconut. In 1881, the second sugar industry was established in the eastern part of the Mangkunegaran palace named Tasik Madu. The area was originally the rice fields, and rice was its primary crops. Thus, together with the establishment of sugar factory, the infrastructures for sugar industry was also established. This article discusses the formulation of the new environment related to the operation of sugar industry. The research used historical method by geographical approach. The results of this study show that after the sugar factory was operated, the new city was also established. The areas included factory environment, sugarcane plantation environment, irrigation systems, settlements, and transportation networks. The settlement environment created places' name which depicted the functions of each location related to the sugar factory. Moreover, the factory environment was increasingly dense, then resulted in poor sanitation which led to bubonic plague in the second decade of 20th century. Hence, the policy to improve the sanitation by Mangkunegaran government was made to prevent various diseases related to the poor environment.