In focusing on the influences of culture on urban regeneration, this research has attempted to show a broad perspective that looks beyond existing short-term urban policies. The history of Masjid-i-Soleyman, an Iranian oil-based economy city, which has passed its rich-oil days and is now suffering major social and economic problems, is used in this research as a suitable ground for a wider investigation into human capacity and urban life. Reviewing the dominant approaches in both theory and practice showed that the analysis of urban problems had two main gaps. First, current urban studies and initiatives have mostly focused on economic urban outcomes and improving standards of living rather than on quality of life and considering the moral and cultural values as a goal and also a driving force for sustainable development. The second gap was the lack of attention given to a competent role to people in producing plans and decision making, as in giving them a real voice and a way of contributing to an improvement in their quality of life. The whole structure of the study has been based upon a premise that solutions to mounting urban problems are incomplete and ineffective without a consideration of cultural and traditional values beneath the surface of the contemporary city. The "human capacity building" approach has been developed in this theses to emphasise that a unifying culture, in many societies, as in the case study area, acts as a human capital, can generate social mobilisation and cause environmental changes. "People " are at the centre of this concept. In the model of "the city as culture" we develop this idea in the context of the city, emphasising the role of people's culture in urban life, and underpinning the key elements (family, community, education, work and communication). Considering such a conceptual foundation, we re-consider the evolution of MIS and the existing problem. This showed that the socio-cultural changes in the citizens of MIS, during 50 years of domination by foreigners over their lives, dramatically decreased both the human capability and social mobilisation of the society. The people who had previously built their environment had been changed in a way which allowed the environment to build their lives. And the people with unified cultural values, social unity and strong social relations had been changed into individuals who sought their own preferences and maximised their own benefits. So, it has been emphasised that the decline of MIS had started many years before the exhaustion of oil; i.e., the decline had begun when the oil industry started to grow. Finally, with concentrating on "knowledge", "social relations" and "motivations" as the key elements which increase "social mobilisation" in the society, the research suggests a strategic policy approach to achieve quality of life and urban regeneration in MIS. This leads us to consider that economic regeneration alone will not bring prosperity to MIS, and similar cities; and sustainable development cannot be summarised in economic growth. Much greater attention must be paid to investing in human capital as an effective strategy for long-term socio-economic regeneration. Cultural factors such as traditions and social relations and family relationship must also be considered seriously. Such strategies should re-consider individuals, groups and communities, and be capable of providing an adequate sphere for people in order to enable them to feel confidence and self-esteem to be involved in building their future effectively, as active agencies rather than victims of the development and change.