Incorporating local urban environmental conservation and regional development in Port Fouad town is the main concern of this paper. This paper focuses on investigating the regional development impact on local urban environment of Port Fouad town. The investigation of the national and regional development policies, particularly the current Suez Canal Zone Development policy, will be used to define goals, interests and objectives of the development of Port Fouad and adjacent. The analysis of these development policies will be explored along with the projects provided to Port Fouad area to define the urban planning and environmental issues that may arise in Port Fouad during the development process. The assessment of the potentials and constraints of Port Fouad development will be conducted to outline the criteria and guidelines for initiating the master plan of Port Fouad. A general development plan will be proposed to the area, particularly Port Fouad Island. In addition, a master plan for the development of Port Fouad Island, which could contribute to the conservation of urban environment of Port Fouad, will also be proposed. Finally, the environmental effect of the proposed master plan is also defined.