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Sustainability is now considered a key objective of urban planning everywhere. However, due to inappropriate planning, weak institutions, lack of resources and poor implementation of policies, most big cities in the developing world have become even less sustainable, environmentally, economically and socially, than they were in the past. Kathmandu, Nepal enjoyed a unique tradition, rich history and a moderate state of sustainability in all areas, particularly a strong environmental sustainability, in the past. However, the rapidly growing and modernizing city of Kathmandu is facing serious problems of sustainability in all fronts: economic, social, environmental and ecological. Whereas environmental and economic sustainability was tacitly imbedded in the traditional planning practices in Nepal, the rapid expansion and modernization of all the major cities in the Kathmandu valley is making them increasingly unsustainable. This paper discusses elements of planning for a sustainable Kathmandu, proposes major indicators of sustainability, and discusses an approach to implement sustainable practices in urban planning and development as appropriate for Kathmandu.