The increasing population and plateaued capture fishery landings have led to increasing demand for aquaculture products. However, environmental challenges are critical barriers to the sustainable development of aquaculture in developing countries. This review critically evaluates the environmental barriers facing aquaculture development in Bangladesh while laying out a roadmap for future development and spatial planning. An increase in the area used for aquaculture most often results in increasing pressure on natural resources such as land, water, energy, and the sources used for feed. Some of the negative externalities that this review focuses on are effluent discharge, the spread of diseases, and conflicts over land use with other ecosystem users. A way forward is to internalize these negative externalities and their costs into production decisions by farmers. Formulation of incentive-based pragmatic regulations can pave a forward path to increased environmental sustainability.