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A walk down the main thoroughfare of Darb al-Ahmar is a fascinating, raucous look at daily life in the Egyptian capital: you get honked aside by trucks and motorcycles, sideswiped by donkey carts and greeted enthusiastically by children. The area is home to the poorest population in the city, but these days many of its once decrepit mosques and palaces, from the Fatamid to the Ottoman eras, are being restored under the auspices of the Aga Khan Development Network's (AKDN) Historic Cities project.

The project has offered not only architectural but also social regeneration. Residents of Darb al-Ahmar are being trained at restoration sites as a way to revive traditional skills and ensure future maintenance of the monuments. "Crafts development is important to the economic sustainability of the people," AKDN preservation manager Dina Bakhoum says. A renovated square at the 14th century Aslam al-Silahdar Mosque allows neighborhood artisans to sell their wares. Local shopkeepers have also started stocking items catering to the burgeoning tourist trade, but the area's residential character is being strictly maintained.

With a panoramic view of the Saladin Citadel from its gorgeous vernacular-style Citadel View restaurant, the tranquil Al-Azhar Park makes an ideal jumping-off point on this newly rich tourist itinerary. A pristine oasis built on a 500-year-old dump, Al-Azhar is the green heart of the new restoration work. One of its gates opens onto the famous City of the Dead (a vast cemetery whose mausoleums serve as makeshift homes to more than half a million living souls and their flocks of goats and cows) and, midway down the park's Ayyubid wall, a stairway in the Bab al-Mahruqi gate leads into Darb al-Ahmar and Aslam Square. This is the nexus for the principal sites of Old Cairo, with the Sultan Hassan Mosque and the Citadel to the south and Khan al-Khalili to the north.

Darb al-Ahmar's main street, Darb Shouglan, runs south past barbershops, mechanics and cafés lined with shisha smokers to the medieval Blue Mosque, so called for its colored tilework (final restorations are scheduled for completion in 2012). Farther on is the area's biggest concentration of renewed historic buildings: some Ottoman houses, the Khayer Bek Mausoleum and Mosque, the Alin Aq Palace and the Mausoleum of Tarabay al-Sharifi. From there, the intersecting Bab al-Wazir street leads straight to the massive 10th century Bab Zuweila gate, past the Bayt al-Razzaz palace (refurbished by the American Research Center in Egypt), the mosque and madrasah of Umm al-Sultan Sha'ban and the minaret of Zawiyyat al-Hunud — and beyond, to where the redesigned Islamic Art Museum has just opened to rave reviews.

The next phase of the AKDN project is the new Museum of Historic Cairo and commercial complex, which will connect to a promenade alongside Al-Azhar Park. All of this work is being seen as a prototype for similar AKDN projects in Muslim districts around the world, like New Delhi's squalid Nizamuddin Basti quarter (already initiated with the renovation of Humayun's Tomb and gardens, upon which the Taj Mahal is patterned).

As Darb al-Ahmar's cacophonous symphony of horns softens toward sundown and the calls to prayer crescendo and intertwine, it reveals a quieter face. "Welcome! Are you lost?" a café denizen calls out. When I smile and shake my head, he beams and answers his own question with "Not yet!" The warmth of the encounter reflects the work being done in Darb al-Ahmar. This is not a soulless tourist zone, but a heritage-rich city center, full of friendliness, vitality and a new pride.

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• Cathryn Drake
• Walk Like an Egyptian. A stroll through Old Cairo