Abstract: Malaysia has achieved remarkable economic growth since 1957, moving toward modernization from a predominantly agriculture base to manufacturing and—now—modern services. The development policies (i.e., New Economic Policy [1970–1990], the National Development Policy [1990–2000], and Vision 2020) have been recognized as the most important drivers of this transformation. The transformation of the economic structure has moved along with rapid gross domestic product (GDP) growth, urbanization growth, and greater demand for energy from mainly fossil fuel resources, which in turn, increase CO2 emissions. Malaysia faced a great challenge to bring down the CO2 emissions without compromising economic development. Solid policies and a strategy to reduce dependencies on fossil fuel resources and reduce CO2 emissions are needed in order to achieve sustainable development. This study provides an overview of the Malaysian economic, energy, and environmental situation, and explores the existing policies and strategies related to energy and the environment. The significance is to grasp a clear picture on what types of policies and strategies Malaysia has in hand. In the future, this examination should be extended by drawing a comparison with other developed countries and highlighting several options for sustainable development.