Purpose: Within the ongoing digitalization of society and dimensions of integration, equality, citizen needs, sustainability and quality of life are of increasing importance as driving forces for cities to become smart. The purpose of this paper is to examine participatory management challenges in becoming a smart old town in the context of cultural heritage. Design/methodology/approach: An explorative approach was applied on a qualitative single case study including in-depth interviews with 21 stakeholders representing local entrepreneurs, nonprofit organizations, the municipality, politicians, tourism organization and residents of an old town district in a Norwegian city. Additionally, participatory observations and document studies were performed. Findings were continuously validated with the respondents. Findings: The present study contributes with stakeholder views on challenges arising from the development of a smart old town and suggests possible innovative solutions for participatory management. The transformation of a city with cultural heritage into a smart city require efforts that go beyond smart ICT implementations into issues of social sustainability. Research limitations/implications: The study brings forward the opportunities that lie in the dynamics of interaction between the spirit of cultural heritage and the body of participatory management. It con-tributes by responding to calls for further research to deepen the insights into stakeholder inclusion in cultural heritage-based city transformation. This explorative study has its limitations as it is based on one qualitative single case. Practical implications: Participatory management insights and recommendations for smart city transformation are provided. Social implications: The study addresses socially sustainable outcomes to create democratic conditions that promote inclusion and community building by understanding what people need and expect from the place where they live and work. Originality/value: This study is positioned as unique in terms of its complex nature of transforming an old town to become a smart old town based on cultural heritage and an open and coordinated inclusion of stakeholders. Smartness in context of city transformation is revealed in many dimensions ranging from technology-driven to more participant-driven.