The post-disaster period is critical for reducing vulnerability and building resilience. Social capital plays an important role in generating and maintaining risk reducing behaviour and a rich evidence base demonstrating its contribution to the recovery process exists. Yet, so far little distinction has been made between the different types of social capital, despite important variations of outcomes. To address this gap, this article examines the evolving roles of specific forms of social capital on the long-term post-disaster recovery process. We explore the disaster recovery process on the active volcanic island of Montserrat in the Caribbean, marked by rapid and intense post-disaster demographic change following the beginning of the eruption in 1995. We explore the challenges of the shift from a relatively homogenous to a relatively diverse population for building a resilient society. Our investigation illustrates the complexity of the recovery process and the coexistence of conflicting objectives which, if poorly managed, can create new forms of vulnerability and impede the sustainability of the development process. We argue that not all forms of social capital development are beneficial for the long-term recovery process. In a diversifying society, bonding social capital may have perverse effect while bridging and linking social capital may be key for building social cohesion, a key contributor to sustainable development. We argue that measures for re-development should be sensitive to the long-term effects of different forms of social capital, in particular their consequences for building social cohesion, a key contributor to sustainable recovery in a dynamically changing society.