Urban ethnographies invigorate our understanding of neo-liberal forms of state violence, spatial segregation, racial/ethnic tensions, criminal activities or subversive mobilizations by bringing the local and particular into fore. This ethnographic inquiry is a contribution to this literature in its examination of alternative legitimacy and sovereignty schemes historically developed in the urban marginalized areas of Turkey and the meanings attached to them in the current neo-liberal moment. It suggests that the neo-liberal urban policies of the 1990s were accompanied by a shift in dominant representation of the urban margins from “liberated areas” to “dangerous places” where immoral economies with a degenerate culture reign at the present. The ethnographic study conducted in Gazi district of Istanbul reveals also a new phase in the inhabitants’ social and political imaginaries about “degeneration.” The persistence of illegal and criminal forms notwithstanding, the focus of this paper is specifically on the different discourses of degeneration that the inhabitants of Gazi produce to assess the current practices of radical leftist groups, and the neoliberal sources or attributes of such discourses and practices. What is striking at the current moment is the way in which the sovereign acts of the radical leftist groups, which were once celebrated and considered morally and politically acceptable and legitimate despite their unlawfulness, are now claimed to exist in a close proximity to privatized forms of criminality and illegality. The paper argues that particular appropriations of the discourse of degeneration indicate not only the extent of ongoing negotiations and contestations for acquiring legitimacy in the urban margins, but equally importantly, a new lexicon that the inhabitants employ to cope with ramifications of neo-liberal discourses, technologies and insecurities directed toward these margins.