Abstract: City waste crisis, land resource exhaustion, urban traffic congestion, and ecological environment deterioration have seriously hindered the modern urban sustainable development. By describing "waste crisis", it is revealed that the increasing quantity of waste output, the insufficient waste disposal capacity, and the unreasonable waste collection and transportation methods are the cause for the problem of "waste siege" in many big cities. In addition to waste classification and "reduce, reuse, recycle" policy, an effective method for solving waste crisis is to improve the waste disposal capacity as well as the collection and transportation method. Furthermore, the concept of underground environment freight transportation is explained, and plan and conceptual design of urban underground domestic waste transfer logistics system in Shanghai are introduced. It is pointed out that the underground environment freight transportation system provides an important and feasible way to relieve the waste crisis. Besides, underground environment freight transportation system can reduce traffic congestion, improve urban environment, lead to related high-tech researches, and promote the sustainable development of modern cities.