The study focuses on the implementation of the United Nations Human Settlements Programme (UN-Habitat), the leading sustainable development programme, that is in crisis. In the author’s opinion, it has limitations in terms of credibility, efficiency, transparency, and accountability. It is obvious that UN-Habitat and the overall urban issues have low significance to the UN system. However, the importance of urbanization issues is extremely high in the context of sustainable development. This was acknowledged in the report of the High-level Independent Panel to Assess and Enhance the Effectiveness of UN-Habitat submitted to the UN General Assembly in 2017. The report stated the urgent measures should be taken to reform UN-Habitat’s governance structure and enhance its normative mandate. The transformation process was launched by the new executive director of the programme in 2018. The study proposes possible solutions to the above-mentioned problems and presents the first-year reform results. The author conclu