The paper focuses on factors prompting redevelopment, with particular attention given to cultural, infrastructural and property market investments, their role and interrelations between them, in regeneration of post-industrial, historic and housing district of Zablocie. Post-industrial district Zablocie has been indicated strategic area of urban development in central Krakow. The aims of the urban regeneration plan for Zablocie were designed to correspond with strategic goals of Krakow metropoly development and to preserve the identity of the industrial district, while developing new urban functions, provide attractive investment opportunities for commercial and residential developments and adequate living conditions for the local society and new residents. Economic, spatial, social, and ecological situation of the district prior to regeneration process is analyzed with emphasis on structural development barriers. Historic heritage and identity-building features of Zablocie are particularly enhanced. Then, the process of regeneration and redevelopment is presented, including institutional framework and development incentives, public infrastructural investments, commercial property investments and, last but not least, cultural investments. Paper refers to the theoretical debate over role of culture and local identity building in urban regeneration and to assumption that culture may play crucial role in regenerating urban areas and supports integration of new and old residents in renewed creative environment with its own particular history and identity. Investigated case of regeneration suggests though, that culture is essential for creating and strengthening local identity but the success of regeneration requires more comprehensive approach, with property investments and infrastructural improvements. The qualitative analysis (eg.opinion surveys among various stakeholders) is supported with economic and demographic data for the area. Particular attention is given to data reflecting changes in the space use and property market performance over last ten years and relations between them.