Due to the lack of effective impact assessment, urban renewal in China is facing many challenges and dilemmas. Residents’ perceptions are important for the sustainability of urban renewal. This study evaluated the impacts of urban renewal on the economic, social, and environmental sustainability of a neighborhood via a case study of Banan, Chongqing, China. According to the analysis of the questionnaires and in-depth interviews and with local residents, Banan’s urban renewal led to both positive and negative impacts. This study proposed strategic approaches to realizing sustainable neighborhood during urban renewal in China according to impacts. Based on the analysis, strategies for creating sustainable neighborhoods during urban renewal were developed, including balancing of economic, social, and environmental interests, satisfying residents’ needs, and enhancing innovation. The impact of urban renewal in Banan was evaluated based on the economic, social, and environmental sustainability of a neighborhood, and the findings will be useful for policy makers and researchers engaged in sustainable urban renewal to refine their strategy.