Many European city centres have seen increasing investment in the last decades, and policies have targeted centrally-located red light districts in particular for regeneration and clean-up. The literature tends to discuss these interventions and the associated social changes in terms of state-led gentrification. While such a classification may serve critical inquiry, we argue that the use of the concept may also entail certain assumptions regarding the future of these areas: their eventual demise as diverse areas with sex-related economic activities. Through a qualitative study of long-term residents, visitors and entrepreneurs in Soho, London and De Wallen, Amsterdam, we highlight how different changes are experienced depending on a person’s positioning. We also identify how locals exert some control over how these processes play out. The outcome, for the time being, has been a continuation of red light activities, albeit modified and adapted to the preferences of new residents, visitors, large investors and the state. For these reasons, we argue that the process and its outcomes should be understood as a distinct mode of neighbourhood change, namely ‘red light gentrification’. Our conceptualisation of gentrification as a locally embedded process demonstrates that the outcomes of state and market pressures are more contingent on local context than ideal-typical or policy-based understandings allow.