This research aimed to study the perceived impact of the urbanization of a small town on its hinterlands by choosing Vang Vieng in Lao PDR as a case study. A questionnaire survey was conducted with 315 households in 12 villages surrounding the town. Data were analyzed by descriptive statistics, mean ranking and multiple regression analysis. The research found that the top ten most negative kinds of impact centered on environmental problems. Results of a Multiple Regression Analysis showed that the length of time the household heads had lived in the village positively influenced their perceptions, while the number of household members belonging to political parties and the proportion of type of agricultural production being changed to serve urban markets negatively influenced their perceptions, with the R2 = 0.133. This research indicates that the environmental problems generated by the urbanization of a small town extended well beyond the municipal area to its rural hinterlands. Therefore, town development should set environmental protection among its first priorities, not only for the town itself but also to cover its rural hinterlands.