The main objective of the current study is to proceed toward the potential of innovative regeneration derived from the local economy in Odlajan (a neighborhood in the historical district of Tehran, 12th municipal). In three steps we have addressed the subject; the first step consists of the concept of urban regeneration and the characteristics of the innovative economy associated with three basic categories (people, business and place). In the next feature, we have examined the objections of that the current status of the selected site; the unsustainable development, reduction of the sense of belonging, and un-sustainable regeneration. The third step, e have tried to define a prospect conceptual model based on innovative urban contribution including aforementioned aspects by short-term measures and long-term strategies.