This paper discusses housing sustainability challenges and applicable sustainable urban renewal strategy for Nigerian cities, and thereby emphasizes the dimension of government-instituted urban renewal policy. This is with a view to projecting the need for urban housing sustainability with respect to developing countries A field survey conducted in Ile-Ife, a typical Nigerian city in its South-Western region is used to appraise the extent of the housing sustainability challenges. The four areas for the survey- Itakogun-Okerewe, Ogbingbin, Obalufon-Ilara and Igboya, were purposively selected from the Ife Central Local Government which constitutes the central area of Ile-Ife. The conditions of the houses and neighbourhoods were assessed by means of administration of questionnaire to residents and observation. In each of the four areas surveyed, the findings indicated that the built environment was deplorable. The indoor and outdoor environmental quality factors were unsatisfactory to respondents and the essential services were not in serviceable condition. The study concluded that the poor and uncomfortable housing and environmental living conditions in the city core areas reflected the stress of urbanization. The findings, though limited in scope to one typical Nigerian city, give insight that housing challenges of urban central areas are in unsustainable dimensions. It was recommended that there must be a commitment to adequate and far-reaching urban renewal programmes based on sustainability, energy conservation and human comfort. Government intervention in the dynamics of the urban environment in Nigeria is urgently required to effect good governance and acceptable urban management.