What factors influence the emergence of rebel sponsorship during civil conflicts? Existing studies in this area emphasize the role played by factors such as transnational ethnic kin and interstate rivalries, while paying less attention to the spatial distribution of population and its impact on a rebel group’s source of support. This paper argues that rebel sponsorship is more likely to emerge in countries with high levels of urban concentration. On the one hand, high urban concentration means that a country’s economic resources are heavily centralized in a few major cities under heavy state surveillance, making it more difficult for rebels to rely on domestic sources to finance their operation. On the other hand, it is easier for rebels to conduct cross-border operations and receive support from external sponsors when the state authority is mainly confined to major cities. Using extensive data on rebel sponsorship and urban concentration, this paper finds strong support for this argument.