Systematic social observation has been used as a health research methodology for collecting information from the neighborhood physical and social environment. The objectives of this article were to describe the operationalization of direct observation of the physical and social environment in urban areas and to evaluate the instrument's reliability. The systematic social observation instrument was designed to collect information in several domains. A total of 1,306 street segments belonging to 149 different neighborhoods in Belo Horizonte, Minas Gerais, Brazil, were observed. For the reliability study, 149 segments (1 per neighborhood) were re-audited, and Fleiss kappa was used to access inter-rater agreement. Mean agreement was 0.57 (SD = 0.24); 53% had substantial or almost perfect agreement, and 20.4%, moderate agreement. The instrument appears to be appropriate for observing neighborhood characteristics that are not time-dependent, especially urban services, property characterization, pedestrian environment, and security.