Throughout its rich past of nearly 3500 years Istanbul has always been a saddle of co-existence of various cultures reflecting themselves in the physical environment as built forms with diversified peculiarities. Residential quarters, sacred buildings, schools & hospitals of Muslim, Christian and Jew communities, situated mostly side by side, have always been a source of richness to urban fabric. Like most world cities Istanbul is, at present, subject to rapid transformations due to an ever increasing complexity of the built environment. This is also coupled with the deterioration of the built heritage. In this connection, besides the attempts made for restoration and preservation of historical buildings, most of the derelict industrial premises have only recently been converted to have contemporary uses like museums & culture centers. Several others are also being recognized. This paper will address itself to the issue of new uses for derelict buildings and their application to design pedagogy as an emerging problem of the city.