The present and future cities are key players in the ecological and energy transition towards a circular economy thanks to their resource, material and energy potential. The EU-funded ARV project with its six demonstration projects, aims to contribute to speedy and wide scale implementation of climate positive circular communities where people can thrive for generations to come. The intent of the ARV project is to develop and demonstrate a new paradigm of “integrated circular design”, by taking a multidisciplinary approach to (re)design buildings maximizing energy efficiency, minimizing life cycle greenhouse gas emissions and costs, optimizing occupant well-being, and ensuring high architectural quality. In Italy, the case study is the Destra Adige Piedicastello area, one of the oldest districts of the city of Trento. It was selected because it has the opportunity to become an incubator and demonstrator of a new way of thinking about local communities, oriented towards climate respect in a circular economy and energy self-sufficiency perspective, and through the development of solutions that can be rapidly replicated and exported to other districts and cities. To this end, it was decided to design an experimental demonstration timber building that systematizes innovative design, construction, and plant engineering solutions for a new culture for positive energy buildings (PEBs). The challenge was addressed employing methods of integrated and participatory design in a multistakeholder cooperation applying the principles of circular economy and focusing mainly on the use of local bio-based materials, the high energy efficiency with active/passive solutions, the effective integration of renewable energy sources and the off-site prefabrication of the building components.