Urban wildlife faces a novel set of challenges resulting in selective pressure that can lead to population-level changes. We studied Australian water dragons (Intellagama lesueurii) from urban and natural populations to test if urban populations differed in body size, shape, and performance capacity. If urban-derived morphology has arisen through selection, we predicted distinct morphological differences between wild dragons from urban and natural areas in both adult and hatchling life-stages. Urban hatchlings were morphologically distinct (shorter body lengths and longer limbs) from natural populations, while urban adult males continued this trend but only for body size (shorter body lengths). We then experimentally reared hatchlings originating from urban and natural populations within urban- and natural-style enclosures (2 x 2 factorial design) for a year to determine if differences in morphology and performance capacity (sprint speed, endurance, and clinging ability) were related to either the individual's origin population or developmental environment. Yearlings reared in urban-style enclosures, irrespective of population origin, had smaller body sizes compared to those from natural-style enclosures, suggesting developmental environment was affecting their morphology. Despite this difference in body size, yearling dragon performance capacity was not significantly different between treatments. Overall, this study provides evidence of a complex relationship driving urban-divergent morphology - whereby urban dragons emerge as smaller hatchlings with longer limbs (innate traits) and are then further influenced by the urban environments that they develop in (phenotypic plasticity); however, and potentially owing to behavioral, ecological, and demographical differences, these changes appear to be sex-specific