This article examines people-place relationships in a carbon-intensive area—i.e., heavily dependent on the steel industry and marked by severe environmental degradation—involved in the EU Just Transition Mechanism (Taranto, Italy). Drawing upon a psychosocial perspective grounded on social representations theory, this article focuses on intertwining the sense of place, identity processes, and agency to understand the dynamics of place stigma and identity devaluation. In-depth semi-structured interviews with active residents were thematically and discursively analyzed. The results suggest both theoretical and applied insights. Overall, they highlight a widely shared negative representation of the place related to territorial stigmatization, ambivalent place attachments, and devaluation of place-based and social identities. To cope with such processes and dynamics, identity processes seem to act as self-protective mechanisms both at a personal and social level. The article concludes by inviting a more comprehensive conceptualization of just transition, harm restoration, and related territorial planning to include the psychosocial processes underlying the community’s well-being and identity.