Shrinkage is a relevant phenomenon for many cities and this trend is predicted to continue in the future. Although urban shrinkage is well recognized in academic discourse, little research has been undertaken on its social aspects. This paper explores the concept of social capital in the context of urban shrinkage and elaborates on how it contributes to social sustainability in shrinking cities. After defining the concepts, we identify resources, empowerment, and participation as key indicators of social capital in the context of urban shrinkage. The paper analyzes these indicators in the shrinking, old industrial city of Heerlen, the Netherlands, based on 24 in-depth interviews with citizens, policy-makers, and entrepreneurs, as well as secondary data. The findings reveal the prominence of three interrelated issues: the importance of local culture, subjective experiences of shrinkage, and a lack of trust between citizens and politicians. We conclude that social capital can facilitate social sustainability in the context of urban shrinkage. However, trust and empowerment are not guaranteed in a shrinking context. In shrinking cities more investments should be made to foster cooperation between civil society and politics and the development of mutual trust.