ABSTRACT : In developing countries, urbanisation has been synonymous with industrialisation where the growth of industries offers job opportunities and incentives for economic development, urban settlements and rapid housing expansions. In Malaysia, the lack of usable land for urban development means that a proportion of the housing estates may have to nestle within industrial establishments. Industrial activities often cause environmental problems such as poor air quality, local temperature increase, excessive noise levels, which in turn affect the natural environment, health and quality of life in these residentialindustrial areas. This chapter reports the development processes of a research aimed at applying sustainability principles in housing development specific to a Malaysian residential–industrial neighbourhood by drawing experiences from exemplar projects in Australia and comparing them with the development needs under local Malaysia conditions, through a case study in a city of Johor, Malaysia. It responds to the lack of environmental policies for housing development in residentialindustrial areas in Malaysia. The ongoing development of this research will eventually lead to designs and construction approaches specific to the needs of the local residents and guidelines for promoting smart and sustainable living in these residential-industrial areas.