Khujayli District, located in the Republic of Karakalpakstan in the northwestern part of Uzbekistan, represents a distinctive case of territorial transformation at the intersection of historical heritage, industrial development, environmental vulnerability, and regional integration. This article examines the principal development prospects of Khujayli District and Khujayli city within the framework of Uzbekistan's national development strategies and the long-term socio-economic transformation of the Aral Sea region. Particular attention is given to industrial diversification, infrastructure modernization, tourism development, cultural heritage preservation, renewable energy, agricultural modernization, entrepreneurship, digitalization, and improvement of water and communal infrastructure. The study employs a qualitative analytical approach based on the analysis of official governmental development programs, strategic policy documents, infrastructure initiatives, and materials concerning the socio-economic development of Karakalpakstan and Khujayli District. The analysis demonstrates that Khujayli possesses significant endogenous development potential based on its geographical position, historical and archaeological heritage, proximity to Nukus and the Turkmenistan border, existing industrial capacity, agricultural resources, and human capital. At the same time, environmental vulnerability, infrastructure constraints, water-resource challenges, and the need for diversification of employment remain major structural limitations. The article argues that the sustainable development of Khujayli requires an integrated territorial-development model that combines heritage-based tourism, green infrastructure, renewable energy, industrial modernization, agricultural value chains, digital entrepreneurship, and improved municipal services. Such an approach could strengthen Khujayli's role as an emerging industrial, cultural, and tourism center of the Aral Sea region.