While environmental, economical and social challenges that the world has been facing recently are increasing dramatically; cities have played critical role in generation many of these problems like negative impacts on environment and overconsumption of resources. Most of the cities today face severe sustainability challenges including sanitation, air pollution, environmental degradation, over population and lack of livability. However, cities may also raise answers to find solutions against many of such complex urban problems, since they are assumed as creative and innovative platforms for social ecosystem of ideas. In this sense, there is increasing interest in ‘City Laboratories’ or ‘Urban Living Labs’, which are established to provide creative experimental platforms with participation of city actors to discuss urban sustainability issues before implementation of deep and structural urban changes for citizens. They provide participatory, co-creative and experimental platforms for self-organizing cities. The aim of this paper is to discuss a collaborative City Laboratory approach -Mersin City Lab- to achieve sustainability principles during urban regeneration process for the selected case-study area located in Mersin. Mersin City Lab focuses on two aspects: Firstly, ‘City Lab’ approach, involves citizens and stakeholders into decision-making process. Secondly, it focuses on urban transformation process with circularity principles including water, mobility, energy, waste management, food and circular economy to achieve sustainable neighborhood development. The paper starts with introduction of ‘city-gaming’ methodology which has been adopted as the main structure of participation of multi-stakeholders. It continues with discussions on stages of the case-study project through implementation of workshops and game sessions by participation of multi stake-holders. Following, the results gathered from overall evaluations of participants’ proposals regarding land-use, mobility and urban water management, local economy, urban development, urban agriculture and food strategies in neighborhood level are discussed. Finally, the paper concludes with impacts of City Labs approach and city-gaming methodology on decision-making process for real urban problems and urban settings.