Vulnerable urban fabrics represent a complex system composed of intertwined and multifaceted elements that challenge conventional definitions of urban decay. The interpretation of “urban deterioration” varies significantly across cities, depending on each municipality’s unique priorities, socioeconomic conditions, and planning concerns. One of the key challenges facing deteriorated urban areas is the lack of integration of New Urbanism principles—an approach that emphasizes walkability, mixed-use development, community engagement, and sustainable infrastructure—in contemporary urban development strategies. Given the profound impact of these neglected elements on the quality of life, sustainable development, and the overall efficiency of urban management, this research aims to identify and elucidate the key indicators essential for regenerating vulnerable urban fabrics, with a particular focus on the principles of New Urbanism. The study focuses on District Seven of Isfahan, a historically rich yet structurally and functionally degraded urban area that faces intensified developmental pressures. This research adopts a mixed-methods approach, integrating both quantitative and qualitative methodologies to ensure a comprehensive understanding of the issue. Quantitative data were primarily collected through structured questionnaires, while qualitative insights were obtained through semi-structured interviews and content analysis. This applied research addresses real-world problems to inform practical urban regeneration policies. Data collection included field observations and literature reviews to establish a theoretical foundation. The main tool for data collection was a structured questionnaire distributed purposefully among 50 experts specializing in housing, urban development, and municipal affairs in District Seven of Isfahan. To ensure analytical rigor, the data were processed using Structural Equation Modeling (SEM) in Smart-PLS to model complex relationships between latent variables and identify significant influences among observed factors. The findings revealed that physical and infrastructural indicators exerted the most substantial influence on the success of regeneration efforts in District Seven. These included the quality of buildings, access to basic services, transportation networks, and the resilience of public infrastructure. Following these, economic-institutional indicators were identified as the next most impactful, encompassing aspects such as funding mechanisms, local governance capacity, institutional transparency, and inter-agency coordination. Finally, social and cultural indicators—including community cohesion, social participation, cultural heritage preservation, and educational opportunities—also played a meaningful but comparatively less pronounced role in the regeneration process. An essential insight emerging from the qualitative phase was the critical role of citizen participation and transparent decision-making processes in enhancing legal compliance and stakeholder accountability. Research shows that citizen involvement in local decision-making, particularly regarding their urban environment, fosters a sense of ownership and responsibility toward urban regulations. This encourages more responsible and transparent actions from urban managers and public officials, strengthening the rule of law and civic governance. Furthermore, the study highlights that adherence to urban management laws and policies, when combined with responsive and accountable administration, can significantly enhance the efficiency of urban renewal projects. It creates a dynamic feedback loop where institutional performance and citizen cooperation mutually reinforce each other. This synergy is instrumental in driving cities toward a more law-abiding, equitable, and sustainable future, particularly in areas afflicted by structural vulnerabilities and historical neglect. The theoretical contribution of this research lies in its integration of New Urbanism principles into the context of urban regeneration within a Middle Eastern city, thus expanding the geographical and cultural applicability of New Urbanism as a planning doctrine. By focusing on a real-world case with specific socio-political and economic conditions, the study bridges the gap between abstract planning theory and grounded urban practice. From a practical standpoint, the research offers a framework for prioritizing regeneration initiatives in urban districts similar to District Seven. Planners and municipal leaders can utilize the identified indicators to structure policy interventions more effectively, ensuring that limited resources are directed toward components with the highest regenerative potential. Moreover, the participatory and institutional dimensions highlighted in the study offer policy insights for cities seeking to incorporate inclusive governance mechanisms into their redevelopment strategies. In conclusion, the regeneration of vulnerable urban fabrics demands a multidimensional and participatory approach, one that aligns physical, institutional, economic, and socio-cultural priorities within a sustainable and human-centered framework. The case of District Seven in Isfahan exemplifies how adopting New Urbanism principles, grounded in community participation and supported by robust urban governance, can not only revitalize declining urban areas but also serve as a model for integrated urban transformation across other cities facing similar challenges.