Over the time, historical centers of cities have experienced changes in their function and social structure. Development of business activities in the centrums by influencing the surrounding housing districts, rapid increase of the traffic density, and the adverse environmental conditions like noise, air pollution etc. have been affecting the demographic structure around the old city core formed by different income groups. As a result of the concentration of low income families in city centers due to easier transportation possibilities, middle and high income groups have been migrating outside the cities. The houses left empty during the development of the centre, causing high income groups move towards outskirts, had to change their functions since the owners could no longer afford their maintenance and repair costs. This change in the user profile has affected the inner and outer components of the buildings and forced them to fit to the new conditions. In the developed countries, results of the escape from centers were handled seriously and the centers were revitalized. In Istanbul also a functional change is observed, especially in the residential buildings. This study investigated this process of transformation through a research project conducted in the southern part of the Istanbul Historical Peninsula (old city center). Historical peninsula of Istanbul has experienced considerable change in recent years. This transformation began mainly from the residential areas close to Sultanahmet, the most touristic district of Istanbul and in other residential areas where tourism is a prioritylike Cankurtaran. In this study, functional changes and differentiation of user profiles around Istanbul old city core are investigated and survey shows that, the majority of the ground floors of the buildings are used for residential commercial, tourism, and atelier functions. The ratio of empty, unoccupied buildings in the area is also high. Since most of the ground floors are used for commercial purposes, the use of residential areas on the upper floors has increased and their use for commercial reasons decreased. From this sample, the land use of the research area was divided into 4 different sub-groups: Tourism, Residential, Manufacturing and Trade Areas. The research revealed two sources of this change. The first is that a transformation took place as the municipality decided to move the small manufacturing facilities outside the district. The result of this decision has been the growth of unoccupied buildings in the old city center of Istanbul. These buildings have been constructed as residence but have lost their functional, structural and even environmental characteristics because they were transformed to manufacturing facilities. Although the aim of the municipality is to transform these evacuated buildings into residential use once again, the initial stage of such a transformation cannot be reported because the evacuation of the area has not yet been completed and some of the manufacturing facilities are still operational. It appears that the transformation of the district is problematic and that more time is needed to complete the transformation process. The second reason is the unplanned transition from a residential area to an area essentially serving tourism (hotels and pensions), and the corresponding transition in commerce from textiles to leather and carpets to support the tourist industry. The biggest transformation in the research area is from housing to other sectors. The houses and empty buildings in the research area have been transformed into commercial buildings and tourism facilities. Commercial buildings are also transforming so that they accommodate tourism sector rather than targeting the needs of the residents of the neighborhood. The residential stock present in the district has been rapidly depleted, and the number of residents in the area has begun to decrease as a result. The area is gradually gaining a business center character and thus negatively affecting the residents. The data collected in this research show that the role of tourism in the process of inner city transformation and it is possible to renovate the buildings for touristic purposes. The physical and economic future of the buildings can be extended by this approach and they will therefore survive longer. However it is important to carry on the vitality of community and the residential population in particular should be encouraged to remain in the area. This would prevent this area from becoming a ‘ghost town’ at the end of working day.