This research paper inquires into the mechanism of exclusion of the homeless population and its proliferation due to macro-structural economic and institutional elements that play-out in the local context of Cluj-Napoca. The empirical data is based on a research that has been done in 2008 in the “Ruchama Night Shelter” and the followed by another research in 2009 that focused on post-socialist policy regime in Romania. The later research was complemented by a map of institutional practices of the local authorities and their responses to extreme urban poverty. The paper aims at showing how economic restructuring lead to the emergence of homelessness in Romania and how homelessness is not only a problem emerging from poverty itself, but also how it is being reproduced by an inefficient policy regime and the lack of a proficient national strategy for social inclusion. Moreover, the paper will point out how in the context of certain economic determinants and institutional structure local actors can deepen the already existent patterns of exclusion.