Poverty is generally viewed in traditional understandings as merely lowness of income, so its noneconomic aspects and dynamic characteristics are neglected. Conversely, Amartya Sen has argued that poverty must be seen as the deprivation of basic capabilities—the substantive freedoms a person enjoys to lead the kind of life they have reason to value. Based on Sen’s capability poverty theory, this article examines the influence of social quality and community capacity on Chinese urban residents’ capability poverty. The social quality perspective assesses societal progress and refers to four conditional factors: socioeconomic security, social inclusion, social cohesion, and social empowerment. Our data analysis from a survey undertaken in Shenzhen indicates that socioeconomic security, social cohesion, and social empowerment can effectively alleviate capability poverty. Community capacity was also an influential factor for capability poverty of urban residents. According to these findings, future anti-poverty projects should focus on improving social quality and community capacity.