Background: In previous public health surveys large differences in health have been shown between citizens living in different neighbourhoods in the Orebro municipality, which has about 125000 inhabitants. The aim of this study was to investigate the determinants of health with an emphasis on the importance of neighbourhood characteristics such as the influence of neighbourhood social cohesion and social capital. The point of departure in this study was a conceptual model inspired by the work of Carpiano, where different factors related to the neighbourhood have been used to find associations to individual self-rated health. Methods: We used data from the survey 'Life & Health 2004' sent to inhabitants aged 18-84 years in Orebro municipality, Sweden. The respondents (n = 2346) answered a postal questionnaire about living conditions, housing conditions, health risk factors and individual health. The outcome variable was self-rated health. In the analysis we applied logistic regression modelling in various model steps following a conceptual model. Results: The results show that poor self-rated health was associated with social capital, such as lack of personal support and no experience of being made proud even after controlling for strong factors related to health, such as age, disability pension, ethnicity and economic stress. Also the neighbourhood factors, housing area and residential stability were associated with self-rated health. Poor self-rated health was more common among people living in areas with predominately large blocks of flats or areas outside the city centre. Moreover, people who had lived in the same area 1-5 years reported poor health more frequently than those who had lived there longer. Conclusions: The importance of the neighbourhood and social capital for individual health is confirmed in this study. The neighbourhoods could be emphasized as settings for health promotion. They can be constructed to promote social interaction which in turn supports the development of social networks, social support and social capital - all important determinants of health.