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Grassroots innovation generates possibilities for the informal and collective production of the territory that the city itself denies, from bottom‐up solutions for sustainable development and consumption, which respond to the local situation, interests, and values of the communities involved. This paper aims to identify how grassroots innovation practices take place and are shaped in 'El Faro', a self‐built settlement at the urban border of the city of Medellín; and how these have allowed the social transformation of health and well‐being. This was done from a qualitative approach with an interpretative scope, under the case study methodology. 'El Faro' is a space built by its inhabitants, in a process that they have called "dignity and resistance", becoming the promoter of what we identify as four 'grassroots innovation practices' developed around three main issues: community water management, artistic training and the creation of community public spaces. This process has allowed them, from the capacity of agency, to understand their poverty situation and face it, modifying the conditions that reproduce it and responding to unsatisfied basic needs, based on innovative solutions that guarantee conditions of life with dignity and well‐being. Likewise, it generates mechanisms that reduce inequality because the community becomes the main driving agent for the construction of the city and the transformation of the health‐disease process, through its community assets. [ABSTRACT FROM AUTHOR]