Chinatowns as iconic enclaves exist in several Australian cities. Among them, Melbourne Chinatown is the oldest, which dates back to the gold rush in the 1850s. Early Chinese migrants settled along the Little Bourke Street on the outskirts of the city, which served as a staging post on their journey to goldfields. Lodging houses were established providing cheap accommodation for sojourners. Gambling houses, opium shops, and brothels also emerged, resulting in the notorious reputation of this ethnic precinct. It was common for the general public to stigmatize this area as a fearful slum. This paper examines the transformation process of the Melbourne Chinatown from a ghetto in the past period of segregation to a well-received popular tourist destination nowadays. The distinctive characteristics and rich heritage of the urban fabric are regarded as a symbol of difference and a valuable asset to multicultural Australia.