This research explores the evolution of Shanghai’s Lilong housing, tracing its historical trajectory from late 19th-century development to its contemporary role in urban renewal. Focusing on the post-2010 shift toward fine-grained preservation, the study utilizes Zhang Yuan as a primary case study to examine pioneering conservation methods. Through stakeholder analysis, the research identifies the government’s role as chief coordinator and evaluates technical and financial innovations, including digital archiving (BIM), building relocation robots, and the Floor Area Ratio (FAR) Bank mechanism. These tools successfully address the physical fragility and financial feasibility of heritage preservation. However, the study also reveals a persistent paradox: while these advancements effectively protect the "bricks and tiles," the prioritization of land exchange value inevitably triggers gentrification. The research concludes that true urban renewal must transcend physical rejuvenation to foster a symbiosis of social vitality within the historic urban fabric.