This paper presents principles and praxis of sustainable approach to maintaining targeted “residential regeneration by density” yet achieving innovations in urban form in a contextual scenario of Dhaka City, the capital of Bangladesh. It is evident from the context that Dhaka is experiencing a dramatic transformation in residential density due to demographic changes during the past two decades due the concentration of social, administrative, institutional, recreational, small-scale industries, and associated housing facilities. The transformation is visible in residential built footprint, significantly due to the demand-driven and density-led market, originated from low rise and low density and transforming to high density high rise. This transformation has been consistently threatening social and environmental realm indicated by depletion of garden houses; reduction of public parks; shrinking walkways; deletion of setback for ventilation and sun shade from trees; slowing down mobility; and obstruction of physical and visual permeability. The paper discussed a pragmatic approach that professionals have adopted to control the density and to introduce scopes for innovative urban forms by way of applying floor area ratio (FAR) methods and further discusses the merits of the methodological process of exercising morphology with a set of new building rules without undermining the market demand.