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The aim of this study is to compare the changes that occurred in the main urban landcover classes of Ulaanbaatar city, Mongolia, during a centralized economy with those that occurred during a market economy and to describe the socio-economic reasons for the changes. For this purpose, multi-temporal remote sensing and geographical information system (GIS) data sets, as well as census data, are used. To extract the reliable urban land-cover information from the selected remotely sensed data sets, a refined parametric classification algorithm that uses spatial thresholds defined from local and contextual knowledge is constructed. Before applying the classification decision rule, some image fusion techniques are applied to the selected remotely sensed data sets to define the most efficient fusion method for training sample selection and for defining local and contextual knowledge. Overall, the study indicates that during the centralized economy significant changes occurred in a ger area of the city, whereas during the market economy the changes occurred in all areas.