The city of Mumbai is engaged in large-scale urban restructuring efforts. Foundational to these is the demolition of many of the city’s informal settlements and the relocation of residents to newly built housing complexes. Often discussed in terms of dispossession, this process is also one of formalization, with spatial, economic, cultural and sociopolitical implications. This article focuses on formalization’s sociopolitical dimension, entailing the registration of residents and the establishment of formal governance provisions and new citizenship expectations. The provision of formal housing and recognized housing tenure has, designedly, been coupled with the establishment of official self-governance mechanisms leading to new civic responsibilities and reshaping the experience of citizenship among former slum dwellers. We explore these governance arrangements, the interaction between formality and informal governance processes and how these arrangements impact residents’ perspectives on citizenship. We also identify several challenges to effective self-governance and the ways in which formal and informal processes shape residents’ experiences of community life, citizenship and urban integration. While residents have benefited from some aspects of formalization (e.g. indoor plumbing and codified tenure rights), it has brought additional burdens, and the challenges of self-governance have, for many relocatees, reproduced a kind of marginalized citizenship within formal structures.