Despite the recent rising interest in sustainability and community-related issues among urban regeneration policy-makers, it is still questionable how far the recent regeneration efforts in historic housing areas achieve a balance between the community needs and conservation policies. To answer this question, this article explores the interplay between conservation, community needs and sustainability in the context of Turkey, focusing on Istanbul. It premises on the assumption that finding the balance between the needs, aspirations and concerns of local communities and the conservation of the built environments will lead to more equitable and sustainable solutions to the problems Istanbul historic quarters are facing. The article explains the interrelation between sustainability, community needs and conservation, investigates whether these notions have been integrated into the urban conservation policy agenda of Turkey or not and then examines the assumption above by focusing on the recent regeneration story of Fetter and Balat (F&B), a declining neighbourhood in the historic peninsula of Istanbul. Debating on the strengths and weaknesses of the recent conservation-led regeneration programme, the article gives clues for future regeneration initiatives to achieve a sustainable balance between the conservation and community needs policies in historic neighbourhoods of Istanbul.