In this paper, I will discuss the dynamic aspects of an ethnic town or an urban ethnic business enclave, particularly its developmental stages and changing function, and the nature of various processes occurring there, taking as examples the Japantowns on the West Coast of the United States of America that I have researched before. We assume that, within the principal stream of spatial assimilation, an ethnic town will emerge, grow, change, and decline typically through four stages-(1) germination stage, (2) agglomerated town stage, (3) business town stage, and (4) vestiges stage. Several specific effects of spatial concentration- that is, incubator, linkages, agglomeration, and focus- may operate to enhance ethnic businesses at each stage. As a sociocultural process, the symbolization to alleviate stress may occur in an ethnic town. The symbols become condensed, widely accepted, and sometimes politically formal, and structural or institutional changes may emerge to maintain the symbolic system, as the symbolization process progresses. The issues in the Japantowns are, in principal, consistent with the above assumptions. An ethnic town is a central business place embedded in the urban regional structure of a multi-ethnic city. An ethnic town is a place to live, to worship, to shop, to dine, to enjoy amusements, to work, to engage in many cultural activities. An ethnic town is also a place to perceive ethnicity, and a place to foster, enhance, and reproduce ethnicity. The ethnicity enhanced through these processes may serve as a significant parameter for future urban processes.