Background: Several studies have highlighted the importance of collective social factors for population health. One of the major challenges is an adequate definition of the spatial units of analysis which present properties potentially related to the target outcomes. Political and administrative divisions of urban areas are the most commonly used definition, although they suffer limitations in their ability to fully express the neighborhoods as social and spatial units. Objective: This study presents a proposal for defining the boundaries of local neighborhoods in Rio de Janeiro city. Local neighborhoods are constructed by means of aggregation of contiguous census tracts which are homogeneous regarding socioeconomic indicators. Methodology: Local neighborhoods were created using the SKATER method (TerraView software). Criteria used for socioeconomic homogeneity were based on four census tract indicators (income, education, persons per household, and percentage of population in the 0-4-year age bracket) considering a minimum population of 5,000 people living in each local neighborhood. The process took into account the geographic boundaries between administrative neighborhoods (a political-administrative division larger than a local neighborhood, but smaller than a borough) and natural geographic barriers. Results: The original 8,145 census tracts were collapsed into 794 local neighborhoods, distributed along 158 administrative neighborhoods. Local neighborhoods contained a mean of 10 census tracts, and there were an average of five local neighborhoods per administrative neighborhood. The local neighborhood units demarcated in this study are less socioeconomically heterogeneous than the administrative neighborhoods and provide a means for decreasing the well-known statistical variability of indicators based on census tracts. The local neighborhoods were able to distinguish between different areas within administrative neighborhoods, particularly in relation to squatter settlements. Conclusion: Although the literature on neighborhood and health is increasing, little attention has been paid to criteria for demarcating neighborhoods. The proposed method is well-structured, available in open-access software, and easily reproducible, so we expect that new experiments will be conducted to evaluate its potential use in other settings. The method is thus a potentially important contribution to research on intra-urban differentials, particularly concerning contextual factors and their implications for different health outcomes.