The rapid growth of urban populations and the need for sustainable urban planning and development has made Unmanned Aerial Vehicles (UAVs) a valuable tool for data collection, mapping, and monitoring. This article reviews the applications of UAV technology in sustainable urban development, particularly in Malaysia. It explores the potential of UAVs to transform infrastructure projects and enhance urban systems, underscoring the importance of advanced applications in Southeast Asia and developing nations worldwide. Following the PRISMA 2020 statement, this article adopts a systematic review process and identifies 98 relevant studies out of 591 records, specifically examining the use of UAVs in urban planning. The emergence of the UAV-as-a-service sector has led to specialized companies offering UAV operations for site inspections, 3D modeling of structures and terrain, boundary assessment, area estimation, master plan formulation, green space analysis, environmental monitoring, and archaeological monument mapping. UAVs have proven to be versatile tools with applications across multiple fields, including precision agriculture, forestry, construction, surveying, disaster response, security, and education. They offer advantages such as high-resolution imagery, accessibility, and operational safety. Varying policies and regulations concerning UAV usage across countries present challenges for commercial and research UAVs. In Malaysia, UAVs have become essential in addressing challenges associated with urbanization, including traffic congestion, urban sprawl, pollution, and inadequate social facilities. However, several obstacles need to be overcome before UAVs can be effectively deployed, including regulatory barriers, limited flight time and range, restricted awareness, lack of skilled personnel, and concerns regarding security and privacy. Successful implementation requires coordination among public bodies, industry stakeholders, and the public. Future research in Malaysia should prioritize 3D modeling and building identification, using the results of this study to propel advancements in other ASEAN countries.