Dredging, which is often coupled with reclamation activities, is carried out in Malaysia for various purposes namely river mouth improvement, flood mitigation, coastal protection, port development, navigational channel or sand mining. Reclamation has become an alternative, especially for urban expansion, because of Malaysia’s fast-paced development. The main objective of this paper is to highlight major challenges in dredging and reclamation activities in Malaysia which are purely based on the authors’ collective experiences and involvement in dredging and reclamation works throughout the country. These challenges were encountered at various stages of their implementation, namely, the planning stage, pre-dredging or pre-reclamation stage, dredging or reclamation stage, as well as post-dredging/reclamation stage. These include compliance with the statutory requirements; controlling and mitigating any negative impacts arising from their activities; existing site constraints; dealing with any conflict of land uses; managing trade-offs and their implementation; measures to control sediment plume; and transboundary issues. These challenges vary from one place to another and require serious attention and efficient management through stringent enforcement, policies and guidelines. Innovative designs of reclamation work such as reclamation configuration, type of perimeter bund, type of dredger, work sequence and phasing would largely function as mitigating measures in ensuring any adverse impacts to the environment are controlled or minimised.