This study analyzes the participatory diagnosis conducted in the locality of Arram (Mareth delegation, Gabès governorate, southern Tunisia) within the framework of a rehabilitation program, approaching it as a research-action process in urban sociology. The objective is not to assess the technical performance of the project, but to examine the participatory diagnosis as a sociotechnical device that brings together residents, experts, and institutions, and contributes to the production of situated knowledge about the territory. The study shows that the participatory diagnosis, far from being a mere tool for identifying needs, constitutes a social arena where territorial priorities are negotiated, internal social hierarchies become visible, and local knowledge is translated into administratively readable categories. Applied to a rural locality that is socially and historically structured, this device reveals a tension between the opening of a space for dialogue and the reproduction of social and institutional asymmetries. The analysis highlights the ambivalence of participation: it enables the emergence of residents’ knowledge often invisible to public action, while simultaneously strongly framing the conditions under which this knowledge can be expressed and translated. The participatory diagnosis thus appears as a privileged site for observing the relationships between knowledge, power, and local governance. By mobilizing research-action as a methodological stance, the article contributes to a broader reflection on the role of participatory devices in urban sociology and in rehabilitation policies, emphasizing the need to recognize situated knowledge as a central resource for public action in Southern contexts.