This paper is based on research that centres on the city of Tokyo, a mature city that is experiencing various transformations, in order to show how social capital and innovation can help build up resilient communities. It presents two major topics: 1) the potential of localities and their social capital and social innovation to actively react to change, and 2) the role of localities for inclusive urban governance. By focusing on five small neighbourhoods in the south of Taito-ward in central-east Tokyo, the paper addresses the following questions: a) what kinds of social networks and interaction exist at the local level, b) how are residents contributing to neighbourhood revitalization and community identity, and c) what are specific examples of social innovative practices, emerging in periods of crisis, in the case-study area as a direct response to the COVID-19 pandemic? By adopting a mixed methods approach drawing especially on in-depth interviews conducted with a range of independent business owners, the study reveals the dynamics between long-term residents and newcomers as they negotiate shared identities that continue to shape the present and future of some of Tokyo’s oldest neighbourhoods. The research findings highlight the need for good urban governance to draw on an improved understanding of the potential of localities, place-based social capital building, and new social practices that are emerging in local third sectors, such as volunteer-run industry-based organizations, which are vital in maintaining informal networks as an alternative to more traditional neighbourhood groups to bond, bridge, and link diverse community members.