The reality of the transportation sector in Palestine is presented first, considering several key aspects and highlighting mobility, traffic congestion, connectivity, and the impact of the restrictions imposed by the Israeli occupation on movement. The most relevant areas that are associated with sustainability in the field of transportation are then analyzed, such as public transport, traffic safety, and the relationship between transportation and the environment and energy. This is followed by an elaboration of the challenges facing developing countries towards achieving sustainable transportation, as well as the opportunities they can benefit from, through presenting the Palestinian case as an example of an emerging country. The imperatives and requirements for having a sustainable and smart transportation sector in developing countries are then outlined, followed by the proposed strategies to achieve this. Finally, an overview of sustainable and smart transportation prospects in Palestine are presented.