© Sonia Alves, 2017. and Scripta Nova, 2017. This paper seeks to test the gentrification hypothesis pertaining to the historical centre of Porto in the context of the changes observed in the economic, social, and housing structures of the city in recent decades. The hypothesis of replacement of low-income families by an upper middle class is tested using a methodology combining techniques of qualitative analysis (semi-structured in-depth interviews with residents and former residents and officials involved in the transformation of the area), and quantitative analysis (statistical data on population and housing). The empirical results indicate that the displacement of low-income families was due more to processes of housing degradation than to housing rehabilitation. It also indicates that in the current phase of neoliberal policy, there are commercial gentrification processes that increase the threat of residential flight from the historic centre.