Neighborhood social capital refers to trusting relationships and opportunities to help each other and improve the quality of life and enhance human wellbeing. NSC lost its significance not only in function but also in number of contacts between neighbors and become deteriorated due to various challenges. The study identified NSC roles and challenges. Mixed design and concurrent embedded strategy is applied. Using purposive sampling eight interviewees, 21 FGD discussants were selected for the qualitative and 395respondets randomly selected for the quantitative. Data collected through in-depth interview, FGD and questionnaire. Thematic and descriptive statistical analysis methods were used for data analysis. The finding of this study showed that NSC plays vital role as a source of social support, informal social protection mechanism and source of information for residents to deal with every day challenges. The quantitative result also showed that rapid community change 91.4%, ethnic based political system (83.4%) and ethnic segregation (71.6%), globalization and technological advancement (68%), and living standard variation (62.4%) are main challenges that disintegrate and deplete NSC at Logiya. Generally NSC plays various roles yet it faced various challenges and vital forms of NSC (trust and reciprocity) declined. The study suggested that pro-NSC policies (place-based) must be designed and implemented for increasing NSC and policy makers, researchers, social work practitioners and donors should give attention to strengthen NSC