The transportation sector in developing countries plays an important role in their socio-economic development. However, there are challenges that face the sector, including the increasing traffic congestion due to the high growth rates of vehicle ownership and the resulting impacts. Strategic planning approach is utilized to achieve sustainability in the transportation sector in the developing countries. The aim of this research is to explore the proper measures that would be capable of dealing with the identified key factors, mainly as related to the vehicles negative impacts on the environment, and to formulate a strategic framework for sustainable transportation system in the developing countries. Palestine is taken as the case study, which could be considered as an example of developing countries, representing lower-middle income countries with moderate annual car growth rate. After performing quantitative and qualitative analysis based on field surveys, statistical data, and interviews, SWOT analysis is conducted, considering the internal status and the external environment. Based on such analysis, the proposed framework for strategic planning towards achieving a sustainable transportation system is formulated. The framework has identified the vision, goals and objectives, and strategies and actions. The output of this study would lay the foundation to debate and adopt the framework in partnership with other stakeholders. Key strategies are defined considering the Shift-Avoid-Improve approach, along with the supportive administrative and legal tools. Such strategies include actions related to the application of energy efficient technologies, promotion of adopting cars with hybrid and electric engines, and support using new fuel alternatives.