This article examines the urbanization of Tibet. We argue that urbanization is a new technique of colonial governance for the Chinese Communist Party (CCP) in the People’s Republic of China (PRC), and is characterized by what Yen Le Espiritu calls ‘differential inclusion’: a form of forcible incorporation resulting in particular spaces and populations being ‘deemed integral to the nation … only or precisely because of their designated subordinate standing’. We explore how urbanization achieves the differential inclusion of Tibet and Tibetans through three distinct processes: segregation (the separation of Tibetan and Han Chinese spaces), congregation (the creation of Tibetan-dominated towns) and negation (urbanization as an administrative process that undermines Tibetan political autonomy). We argue that these three processes form an integrated strategy of colonial governance aimed at achieving differential inclusion. We conclude by arguing that our case study of the urbanization of Tibet offers a model for thinking about the role urbanization plays in enforcing differential inclusion as a means of colonial governance elsewhere in the PRC, and beyond.