The Trieste Habitat Micro-area Programme (HMP), an innovative social-health service policy, has offered a natural experiment to empirically evaluate the social mechanisms through which social capital may have an impact on health inequalities. To date, literature clarifying this causal chain is scanty. This empirical study tested the following hypotheses: H1) innovative social-health practices can activate social mechanisms intentionally and systematically so as to generate social capital; H2) such social mechanisms increase specific properties of social capital, in particular those influencing more vulnerable individuals' relationships; H3) investing in these properties can enhance capabilities and, consequently, control over the health of more vulnerable individuals. The study was carried out during 2016-2018 and used both qualitative and quantitative methods. The qualitative part investigated the field experience of the HMP through interviews, focus groups and workshops with HMP professionals. The quantitative part assessed the effect HMP might have on these properties and the capacity to face health risks of more vulnerable individuals. Three samples, each of 200 individuals, residing in the target and in control areas were interviewed using a semi-structured questionnaire. One control sample was matched to the 200 treated subjects using a Propensity Score Matching. The results of the study suggest that the HMP intervention stimulated the development of empowerment, collaboration and interdependence among vulnerable people. This produced an increase in their social capital under several aspects, including enhanced trust, network extension and participation, cooperation and reciprocal help with neighbours, as well as improving their judgement on quality, timing and efficacy of the help received from institutions, relatives or friends. These findings show that socially shared relationships can create innovative local models of a universalistic generative welfare system, which would be both inclusive and able to enhance individual capabilities. These models could be disseminated and carried over to other contexts. © 2020 The Authors.