This study investigates the preservation of urban heritage in Yogyakarta, Indonesia, exploring the delicate balance between conserving cultural heritage and fostering modern urban development. In the face of rapid urbanization and globalization, Yogyakarta’s rich Javanese heritage encounters significant challenges in maintaining its historical and cultural assets while accommodating contemporary needs. This research underscores the importance of urban heritage—including historical, cultural, and architectural elements—in preserving the identity of metropolitan areas. The primary aim of this study is to analyse Yogyakarta’s policy on cultural preservation, focusing on the city government’s strategies to harmonize heritage conservation with urban development. The methodology employed includes Focus Group Discussions with local leaders, interviews with academics, analysis of government policies, on-site observations, and media content analysis. The findings indicate that Yogyakarta’s approach to cultural heritage management represents a distinctive model within Indonesia, successfully integrating heritage preservation with economic growth and cultural identity. This approach emphasizes the crucial roles of the community and government in safeguarding heritage and traditions. The study proposes a balanced method of development and conservation, presenting Yogyakarta’s model as a potential guide for other cities. This model highlights the value of community involvement and the significance of cultural heritage in enriching contemporary and future societal contexts.