Damlacık District with a history dating back to Roman Period is one of the oldest Turkish settlement areas from the 17th century in Kemeraltı neighborhood of İzmir. The district, preserving its historical settlement texture until today, having a bay view together with its centuries old trees located within green areas has environmental and architectural features that need to be protected. Interventions to be carried out in this area having the historical, cultural and architectural indicators of the city’s past identity, should not lead to the loss of its values. Konak-Yeşildere Tunnel, the excavation of which started in 2011 and completed in 2015, connected Konak to Yeşildere passing under the north-south direction of Damlacık District. The aim of this study is to investigate the increasing damage in Damlacık District, due to the construction of Konak-Yeşildere Tunnel, located in an Urban and 3rd Degree Archaeological Site with its historical and traditional features, and consequently to develop conservation proposals. Within the scope of the study, the area was sub-divided into smaller zones considering the diversity and distribution of commercial and residential use in Damlacık District, its protected and altered characteristics, social and physical effects of the tunnel in the area. The district was examined from environmental, architectural and social aspects; intervention decisions were developed by assessing its values and problems. As a result, revitalization of Damlacık District through structural measures, social projects and restoration projects starting from the tunnel route and its surroundings, establishing a project and implementation unit under the supervision of local administration, restoration of the remaining registered and sugessted for registry structures in the tunnel route and restoration of the selected historical houses for adaptive reuse by residents were proposed.