A groundwater flow model was developed for a small-scale area (less than 0.5 km2), the downtown historical area of Lisbon, with the purpose of assisting in the urban planning process. The scale of the model and the highly urbanized character of the area brought about a number of difficulties in the modelling process, which are thought to be of common interest if groundwater models are to be used as urban planning tools. A 3D geological facies model was used to describe accurately the geological heterogeneity. Underground infrastructure features, such as car-parks, subway tunnels and stations, were incorporated within geographic information system layers, and recharge linked to the water mains and stormwater drainage systems has been accounted for. The model is highly sensitive to the parameterization of heterogeneous fills and embankments that cover the area and that are very difficult to characterize hydraulically. Despite the many challenges associated with small urbanized areas, the use of the model is demonstrated in the context of planning decisions concerning, for example, the location and design of underground structures.