One of the essential anthropogenic influences on urban climate is land-use/land-cover (LULC) change due to urbanization, which has a direct impact on land surface temperature (LST). However, LULC changes affect LST, and further, urban heat island (UHI) still needs to be investigated. In this study, we estimated changes in LULC from 1993 to 2018, its warming (positive) and cooling (negative) effect, and their contribution to relative LST (RLST) in the city of Islamabad using satellite remote-sensing data. The LULC was classified using a random forest (RF) classifier, and LST was retrieved by a standardized radiative transfer equation (RTE). Our results reveal that the impervious surfaces has increased by 11.9% on the cost of declining barren land, forest land, grass/agriculture land, and water bodies in the last 26 years. LULC conversion contributed warming effects such as forest land, water bodies, and grass/agriculture land transformed into impervious surfaces, inducing a warming contribution of 1.52 °C. In contrast, the replacement of barren land and impervious surfaces by forest land and water bodies may have a cooling contribution of −0.85 °C to RLST. Furthermore, based on the standardized scale (10%) of LULC changes, the conversion of forest land into impervious surfaces contributed 1% compared to back conversion by −0.2%. The positive contribution to UHI due to the transformation of a natural surface to the human-made surface was found higher than the negative (cooler) contribution due to continued anthropogenic activities. The information will be useful for urban managers and decision makers in land-use planning to control the soaring surface temperature for a comfortable living environment and sustainable cities.