ABSTRACT Neighbourhood Sustainability Assessment (NSA) is vital in navigating the complex dynamics of social, environmental, and economic factors in localised settings, especially amidst the challenges of urbanisation, resource scarcity, and climate change. NSA tools have emerged as pivotal instruments in integrating sustainability into urban development, recognising neighbourhood as fundamental units for systemic sustainability approaches. However, existing NSA methodologies tend to favour environmental aspects, prompting a call for more balanced approaches encompassing social and economic dimensions. The study underscores the need for NSA tools to evolve towards context-sensitive methodologies for broader applicability across diverse urban landscapes. Through a literature review, the study highlights the importance of integrating community perspectives, sustainability indicators, and context-specific approaches in NSA, advocating for holistic strategies to drive sustainable urban development agendas. This study presents a methodological framework for selecting neighbourhood sustainability indicators in Aizawl, the capital city of Mizoram which is located in N-E India, by incorporating community perspectives and expert judgments. The methodology involves several steps: review of existing NSA frameworks to select comprehensive indicators, perception and public participation surveys to identify local indicators, engagement of experts through the Fuzzy-Delphi Method, and application of the Analytic Hierarchy Process (AHP) for indicator prioritisation. Through these steps, 47 essential indicators were selected, covering social, economic, environmental and governance aspects. The study emphasises the importance of combining bottom-up community input with top-down-expert knowledge for comprehensive and reliable sustainability assessments. Challenges such as energy and water resource deficiencies are highlighted, underscoring the need for balanced approaches to neighbourhood sustainability planning.