The interest in changing social ties in urban neighbourhoods has generated sociological debate for decades. This paper contributes to this debate by focusing on the relationship between community and neighbourhood formation in the development of an informal settlement. While informal urbanisation is widely researched, the attention is usually placed on urban planning and development rather than a socio-spatial aspect. Drawing on an ethnographic case study, this paper analyses the transformation of agricultural land to urban settlement following residents’ self-organisation in Mexico City. The case study shows how social ties developed alongside collaboration between residents, highlighting a relationship between the social and spatial processes. Collaborative processes from small neighbour groups to broader neighbourhood-wide projects that contributed to the delivery of basic services and urban infrastructure also enabled the formation of community support networks. The findings highlight the intertwined nature of community and neighbourhood formation.