About 40 years ago, traditional villages, towns and cities of the Arabian Peninsula started to lose their regional characteristics and embody modern forms and shapes. Since then, these characteristics have been subject to dilution due to social and cultural changes as well as institutionalized changes imposed by planning and architectural practices. This process creates debates and clashes between tradition and modernity. Projects carried out since 1975 are the least representative of the regional characteristics but do attempt to have urban and architectural identity. This paper argues that all the actors in “design formulation” (clients, architects, urban designers and planners) are trying to use historic elements in the creation of architectural identities. In fact they are making efforts to create urban and architectural identity to substitute regional characters. These attitudes flourished as a result of dynamic cultural, economic, political and ritualistic influences. This paper highlights the importance of urban and architectural identity in architectural and urban projects in Arriyadh, the capital city of Saudi Arabia because such projects create precedents for other Saudi villages, towns and cities. The study identifies the forces behind the initiation, transformation and evolution of the urban and architectural identity and attempts to supplement scholarship in the fields of architecture, urban design, and planning with regard to the role of identity as a tool for improving the spatial quality of the built environment. Architectural identity participates in setting up meaningful schemata which influences human behavior as a cultural process. The paper supports the concern for search for historic symbols which may influence the architectural identity and the quality of perceived environment during the design process of new or transformed physical environments. The paper views the traditional part of the city as an amalgamation of history and economic interests and its symbolic importance seems to be a perfect place for the emergence of different forms of engagement between tradition and modernity. The importance of the traditional part is unique while the importance of continuity of tradition is very likely complementary.