Financing urban development projects, as a cornerstone of urban governance, is persistently beset by multifaceted structural, fiscal, and operational hurdles. This challenge is particularly acute in megacities such as Tehran, which is characterized by an extensive volume and diversity of projects alongside escalating infrastructure demands. Accordingly, this study aims to identify and critically analyze the primary challenges associated with financing urban development projects within the Tehran Municipality and to propose viable strategies for mitigation. The study was conducted using a qualitative approach, employing thematic analysis as the methodological framework. Data were gathered through 14 semi-structured interviews with subject-matter experts in urban management and subsequently analyzed via thematic analysis. The findings yielded 16 overarching themes, categorized into 7 distinct challenges and 9 strategic solutions. The identified challenges include: “Erosion of Credit and Trust,” “Operational and Bureaucratic Impediments,” “Revenue Deficits,” “Fiscal Dependence on the Central Government,” “Inability to Attract Investment,” “Legal and Structural Constraints,” and “Inefficient Cost Management.” Conversely, the extracted solutions encompass: “Structural Reforms and Bureaucracy Reduction,” “Reform of Core Revenue Streams,” “Decentralization,” “Enhancement of Transparency and Trust,” “Incentivizing National and International Investors,” “Facilitating Private Sector Participation,” “Innovation in Financial Instruments,” “Strengthening Sustainable Revenue Sources,” and “Financial Diversification and Reduction of State Dependence.” The findings of this research offer critical insights for urban policymakers to formulate sustainable, efficient financial models tailored to the specific context of Tehran Municipality, thereby facilitating the effective execution of urban development projects.