The paper introduces the transportation system in Palestine and illustrates the opportunities and challenges as related to its future development. First, the development of roads and transportation during the past century and up to date is briefly presented, highlighting the current issues and constraints, including those related to the status of the road infrastructure, and the increasing traffic congestion and the associated energy and environmental impacts. The paper then presents an assessment of the sector, concentrating on connectivity and mobility, including the role of the Israeli occupation on liming these among and within the Palestinian communities, public transportation, traffic safety, as well as energy and the environment. Prospects for the development of the transportation sector on the light of the recently prepared National Transport Master Plan of Palestine are discussed. Future expectations are discussed especially as related to factors including the political, technological, behavioural, operational, as well as those related to policies and strategies. The paper ends with raising questions on the interventions needed to overcome the challenges and build on the opportunities.