Adaptive reuse offers a sustainable approach to heritage conservation, particularly in historic cities like Penang, Malaysia, where architectural assets are often neglected. This study investigates the critical success factors that underpin adaptive reuse by analysing three repurposed heritage buildings—Sun Yat Sen Museum, Cheong Fatt Tze Mansion, and Hin Bus Depot—through a qualitatively driven mixed-methods approach. Using walking surveys, structured observations, and photographic documentation, the research examined architectural integrity, material conservation, functional adaptation, and community engagement. A subsequent questionnaire survey of 45 local residents, selected for their long-term familiarity with Penang’s cultural landscape, explored public perceptions of sense of place and identity representation. Findings reveal that successful adaptive reuse is underpinned by emotional attachment, functional relevance, and inclusive design. While all three sites contribute to Penang’s cultural identity, each demonstrates a distinct balance between historical preservation and contemporary use. The study culminates in a contextual framework comprising four interconnected dimensions—Sense of Place, Programming, Material Conservation, and Community Engagement—which collectively inform sustainable and community-oriented reuse strategies. This research contributes to the discourse on heritage-led urban regeneration by emphasising local perspectives and lived experiences in shaping culturally resilient environments.