With global environmental change and quality of life issues at the forefront of international discussions today, urban development strategies and policies are often framed around various sustainability or liveability goals. Regardless of the sustainability assessment (SA) tool used to evaluate performance and track progress, the spatial heterogeneity of urban system characteristics should be accounted for, given that distinct neighbourhoods exist as a result of specific local features. In the same way, sustainability can also be expected to be spatially expressed across the urban system as a reflection of the local environment. However, urban SA performed in research and practice today often adopt a passive approach, if any, to incorporate spatially explicit approaches. Scholars have also called for more work to be done to better understand the impact of neighbourhood effects on urban sustainability and liveability. This thesis examines urban sustainability and SA through two spatial lenses (spatial scale and spatial boundary) to investigate the relevance and role of local urban form and the neighbourhood unit in the assessment of urban sustainability. The canton of Geneva, Switzerland (GE) is used as the empirical case study here. First, secondary data describing various aspects of Geneva's built environment was to establish a typology of local urban form via cluster analysis. This typology and other neighbourhood design criteria were then used to define functional neighbourhood units across GE. Using a set of off-the-shelf urban SA indicators, the physical sustainability (relating to the built environment) of these functional neighbourhoods was evaluated and compared across spatial scales. Next, the functional neighbourhood boundaries were compared with perceived neighbourhood boundaries drawn by Geneva residents. These perceived boundaries were collected through a spatially explicit online survey which also gathered data on neighbourhood satisfaction across various themes that was subsequently used to assess social sustainability across the same set of functional neighbourhoods. Two indicators describing the extent of the overlap between functional and perceived neighbourhoods were established and used to characterise the relationship between the two boundary definitions. For both the physical and social dimensions, statistical analyses were conducted to investigate the relationship between local urban form and sustainability. Lastly, as an extension to the core findings of this thesis and the Geneva case study, an exploratory analysis of urban sustainability tradeoffs at the neighbourhood scale was carried out. To sum up, thesis scrutinises the role of intra-urban system spatial heterogeneity in shaping urban dynamics, specifically in relation to the built environment and urban sustainability. The relevance of the local neighbourhood unit to urban sustainability and SA are analysed from different perspectives; and methodological recommendations for urban SA as a tool to support decision-making and foster sustainable urban development are presented.