Compared with the considerable number of studies on urban redevelopment highlighting the downside of wholesale redevelopment in breaking up communities, only limited reports exist on successful prevention of demolition of lived spaces in place-specific communities with strong social capital. Massive redevelopment and restructuring of the urban fabric have occurred in post-open door China. Top-down urban regeneration policies in Chinese historic cities are characterized by a bipolar approach: conservation of limited listed heritage buildings and massive redevelopment of traditional quarters. This paper examines an extraordinary story of a community in the Drum Tower Muslim District in Xi’an that counteracted the implementation of a district redevelopment plan. This study also explores how the strong religious and ethnic social capital of the Muslim residents helped them sustain the fight for their right to the place. Their fight eventually forced the district government to incorporate the retention of their ways of living and business in the revised redevelopment plan.