Neighbourhood quality and sustainability are key concepts within the environmental policy of the city of Amsterdam. Applied to neighbourhoods both address a different aspect of quality: neighbourhood quality refers to the evaluation of the living environment by inhabitants; sustainability refers to conservation and the future prospects. Implementation of policy based on these often conflicting goals was hampered by the lack of valid indicators for sustainability and neighbourhood quality. Within this context two studies were carried out for the city of Amsterdam. This paper reports findings from the study examining the determinants of neighbourhood quality and the validity of objective indicators. For the study 1.853 inhabitants of fourteen neighbourhoods were questioned on fifty neighbourhood attributes and their overall satisfaction with the neighbourhood. Results show that the evaluation of neighbourhood quality in the first place depends on the visual appearance (beautiful, well_kept, decent); the spaciousness and the amount green areas; noise and disturbance by neighbours; arid social heterogeneity. To a lesser extent the following aspects are important: crime; vandalism: air pollution; outdoor facilities for children; public transport and shopping facilities. In inner-city neighbourhood satisfaction is also enhanced by liveliness and the proximity of bars and restaurants. Results indicate that neighbourhood satisfaction is strongly influenced by the evaluation of ones own home. In the second part of the study the relation between perception and objective attributes was investigated. As could be expected the potential indicators had little validity on the individual level. On an aggregate level the validity was much higher. Average housing quality in the neighbourhood (size and value), the amount of green space and social structure (income, unemployment, density) seemed useful predictors of the average level of satisfaction. This means that on a global level neighbourhood quality can be evaluated using objective indicators, but that little will be learned about the way individual inhabitants perceive and evaluate their neighbourhood. The policy implications of this conclusion are one of the themes discussed in the paper.