The Isfahani style represents a method of traditional Iranian architecture and urban development that existed in the early 20th century and is regarded as a leading model in most traditional Iranian cities. It exhibits several vigorous features contributing to its recognition as a traditional approach to sustainable architecture and urban development. This research endeavors to reveal a theoretical framework beneath these inspiring aspects using the typology of sustainable modern forms, including the hierarchy, passive design strategies, compactness, density, diversity, mixed land use, pluralism, balance, good composition, and integration over time. To this end, the study employs qualitative research methods, drawing from traditional samples, to identify innovative, energy and socially efficient, and low-impact strategies implemented in this vernacular architecture of Iran's semi-arid and hot climates. The findings revealed that the neighborhood concept as a local and plural community (Mahalla) was a vital phenomenon in Iran's urban development. Apparently, the demise of this paradigm effectively played an important role in the numerous challenges regarding the social, energy, and economic viability of modern Iranian cities. Hence, this study presented theoretical frameworks—aligned with sustainable concepts—from the Isfahani style through its analysis, classification, and interpretation, which can contribute to modern urban development.