Juxtaposing the empirical findings of a qualitative research study of an urban transformation project in the Kadifekale squatter district of Izmir with the changed nature of urban politics in a neoliberal context, this article aims to trace the manifestations of the regime of informality in Turkey. Ethnographic consideration of the motives behind these projects, the way they have been carried out and their consequences for the lives of the inhabitants points to an extended space for informal politics tactically manoeuvred by state officials of various ranks. Particularly during the last two decades, neoliberal urban policies have triggered an intensification of power discrepancies in both the vertical and horizontal dimensions and a fragmentation of community structure in the localities — mainly along socioeconomic divides. This research reveals a transition from positive/passive to negative/active uses of informality in the disposition of the state towards the urban poor when the fast and efficient conduct of urban transformation projects is in question. The characteristics of the locality as a landslide zone, the already fragmented socioeconomic structure in the neighbourhood and the dense presence of Kurdish immigrants facilitate the putting into practice of informal strategies. The immigrants who cannot define a place for themselves in the simultaneously formal and informal context of the project have been seriously disadvantaged.