The physical structure of Podgorica was predominantly developed with a traditional planning concept, whereby public open spaces of the city are as important as the city’s architectural objects. The focus of this paper is the perception of a traditional street in the context of sustainable urban regeneration. The aim of this study is to submit a proposal, through the Urban Design course at the Faculty of Architecture in Podgorica, for the physical regeneration of twelve traditional streets (eight street directions) that define the central core of Podgorica, known as Mirkova Varoš. These streets are the sites of social processes, interpreters of cultural and identity values of the society, and primary keepers of collective memory. It was detected that the attractiveness of the case study streets is weakening due to inadequate social and professional engagement in the processes of preservation and regeneration over time and also due to new users’ needs. Global requirements reflect the weakened role of public open spaces as places of social interaction, in favour of primarily closed shopping centres that are the new urban artefacts of the 21st century city. The first phase of this study is related to the theoretical interpretation of regeneration and the role of public space in the context of socio-spatial sustainability. The second phase of the study is directed toward estimating the perception of the current state of the street area in Mirova Varoš, as seen by the case study area users and architecture students, using (1) visual, (2) tactile, and (3) auditory criteria. The obtained results serve as a platform for concrete urban design proposals for sustainable street regeneration that will reflect a stronger socio-spatial interaction between (1) user–place, (2) the place–city system, and (3) local processes–global flows.