Open-air food markets have long functioned as key sites of food provision, social interaction, and local economic exchange in European cities. In recent decades, many of these markets have undergone significant transformation due to modernization-oriented urban regeneration. This study examines the transformation of Palilula Market in Belgrade, Serbia’s capital, from a traditional open-air market to a large, enclosed market complex, situating the analysis within the post-socialist urban context. Utilizing historical analysis, semi-structured interviews with vendors, and on-site observations, the research examines the impact of spatial reconfiguration on vendor livelihoods, economic practices, and social relations. The results demonstrate that, although the new indoor market has enhanced infrastructure, hygiene, and year-round usability, it has also led to higher rents, reduced stall capacity, increased competition, and stricter regulations. These developments have constrained small-scale vendors and diminished informal social interactions. This study expands the understanding of urban regeneration processes in post-socialist, neoliberal contexts by showing how market modernization shapes the inclusivity and socio-cultural significance of traditional urban markets.