Informal settlements pose multifaceted challenges to urban development, necessitating a reconsideration of traditional upgrading approaches. This study examines the integration of the street-led approach within the Ezbit Hegazi informal settlement, leveraging the Alexandria University Centre of Excellence for Smart Urban Governance’s (ALEXU-CoE-SUG’s) innovative framework. It highlights the centrality of ‘Demand for Good Governance’ (DFGG) practices in bridging the gap between governmental (supply-side) and community (demand-side) objectives, fostering a collaborative urban upgrading process. Through an in-depth case study analysis, this paper reveals the potential of aligning governmental agendas with local aspirations, emphasizing the importance of local dynamics in sustainable urban development. The findings indicate that integrating bottom-up community engagement with top-down institutional support can lead to more effective and sustainable urban regeneration. The study concludes that a combined approach, leveraging both grassroots initiatives and formal governance structures, is crucial for the successful upgrading of informal settlements. The findings contribute to the urban studies literature by providing insights into the synergies between supply and demand perspectives in the context of informal settlement upgrading, offering implications for policy and practice in similar urban settings globally.