Integrating socio-economic development-led spatial-physical design intervention in traditional settlement needs a deeper understanding of the social-cultural-economic dimensions of the people, place, and environment. Such intervention at the settlement level involves the challenge of context-sensitive placemaking concerning the existing social-cultural-economic space systems that contain the social way of life and livelihood. This research explored this challenge taking Bang-Phli, Samutprakan, Thailand, a successful water-integrated placemaking project. With a mixed research approach that combines methods from design ethnography and built environmental design, this study focused on exploring the spatial-physical design approach, process, and considerations behind the context-sensitive placemaking. Outcomes of this research suggests how people-place-environment sensitive placemaking can nurture the co-existence of socio-cultural way of life, environmental stewardship, and economic development in traditional settlement in a socially and environmentally sustainable manner.