The ongoing slum upgrading program is encouraging to find alternative ways of slum area arrangement that better suit local characteristics. Studies indicate that managing slums in the size of a neighborhood has difficulties in consolidating private assets into communal assets because of particular social cohesion. A neighborhood in a slum area can be split into sub-neighborhoods that can be handled uniquely, and it is more manageable to share shelters and facilities assets because of immediate neighbors cohesion which bonding in a sub-neighborhood area. This sub-neighborhood segmentation is applied as the basis for the residential planning and design of slum dwellings in Kampung Cigugur Tengah, Cimahi City. Planning and designing processes adapt a linear process approach that is supported by contextual models to get special needs from the community. Because of the certainty of land tenure and the possibility of physical improvement of the environment, there is a tendency not to move from improved areas. Sub-neighborhood physical development plans and designs can increase the likelihood of successful implementation of slum improvement programs because of the simplicity of fund management and construction. There is relatively high attention to the design of sub-neighborhoods based on non-transferable asset ownership; the opportunity for increasing occupancy capacity and open space; and a better local environmental change.