In order to analyze the interdependent vicious circles of social exclusion and spatial relegation, this article will discuss the findings of fieldwork in the inner-city neighborhood of Tarlabaşı, İstanbul. The introductory section revolves around the concepts of poverty and exclusion, followed by a brief historical background of this locality. The core of the article is devoted to an analysis of different dimensions of exclusion—namely, economic, social, political, spatial and discursive dimensions. In the neighborhood of Tarlabaşı, it is possible to trace the signs of a transformation leading to the creation of a new type of urban poverty based on exclusion. This inner-city area, a territory of urban relegation par excellence, illustrates that informal activities no longer suffice to integrate socially; that the neighborhood is increasingly becoming polarized along lines of class, religion and ethnicity; that inner-city slums are no longer transitory places for rural-to-urban migrants, but perpetual spaces of relegation; and that the conflict-induced migrant Kurds are the primary candidates to become Turkey's “underclass.”