This research explores the role of the local identity and cultural heritage in urban regeneration strategies and the conflicts caused by significant urban renewal and development projects that represent a negative impact on the local identity that is being promoted. This study analyses from the domain of heritage and identity, the conflict of two interventions in the city of Valparaiso, Chile, and establishes the importance of governance and civic society participation for the construction of heritage. It also considers the problematic caused by the institutional and policy framework of the case study whose centralism and lack of integral approach of current development policies, impact negatively in the development of cities and local aspects.