Global challenges like climate change and the green transition call for actions rooted in local initiatives. The New European Bauhaus (NEB) supports this by encouraging a place-based approach, fostering small-scale efforts by individuals, neighborhoods, and communities. Neighborhoods are shown to be highly efficient in resource use, especially when there is a balanced distribution of infrastructure, services, and building density. However, challenges such as urban decay, lack of public facilities, disappearing local businesses, and neglected green spaces often hinder this effectiveness. These issues contribute to weakened community bonds and individualistic attitudes, which can increase environmental impact and reduce awareness of collective action’s role in achieving a green transition and managing climate risks. The NEB adopts a multilevel, participatory, and transdisciplinary strategy to steer communities toward sustainability, aesthetics, and inclusivity. LIFE Bauhausing Europe seeks to launch this transformation in five European neighborhoods (two in Spain, and one each in Croatia, Hungary, and Latvia) by implementing NEB principles. This project demonstrates that NEB’s approach can be adapted to diverse areas, regardless of their size, setting, or challenges. The ultimate goal is to create sustainable, aesthetically pleasing, and circular communities that are co-governed by their residents.