It is important to understand the settlement morphology and its transition process in the rapid urbanization cities of developing countries. It is equally important to learn about the relationships between transport energy consumption and the transition of settlement morphology and its underlying processes. Finally, if the existing transportation technologies are already adequately meeting the environmental challenges of that sector then urban policies can serve as a guide to the transition of settlement morphology, especially for developing countries. Through the application of an integrated land use and transportation modeling system, TRANUS, the paper demonstrates that this transition will bring great changes to the urban spatial distribution of population, jobs and land use, and to residents' travel patterns, thus resulting in different transportation energy consumption and CO2 emission levels, but that these changes can be managed through appropriate public policies.