The present paper adopts a social identity perspective to examine the relationship between community‐based identification and well‐being, resilience and willingness to pay back in the context of urban regeneration. A sample of 104 residents across five deprived urban areas in the South‐West of England that have recently undergone or are about to undergo regeneration projects, completed a survey. The results demonstrate that areas where a more community‐centred, bottom‐up, approach to regeneration was taken (i.e., “culture‐led”) showed higher levels of community cohesion than areas where the community dynamics were ignored (i.e., a “top‐down” approach to regeneration). Increased community identification was linked to greater perceived social support, community‐esteem, personal self‐esteem, and self‐efficacy. These psychological processes were, in turn, linked to increased resilience and well‐being, as well as a stronger willingness to pay back to the community. The results are consistent with the social identity approach. Implications for urban regeneration strategies are discussed.