Transit-oriented development (TOD) is considered as one of the most sustainable neighborhood planning practices, yet relatively little evidence exists on the environmental sustainability of TODs. This study examines transport-related CO2 emissions of TODs in Dhaka, Bangladesh. Individual-level CO2 emissions were calculated for three types of trips (home-based work, home-based school, and home-based other non-work) of 31,101 residents living in TOD and non-TOD neighborhoods. Three multi-level models were estimated, one for each trip type, to identify the effects of TODs on CO2 emissions, controlling for spatial heterogeneity and spatial dependency of the neighborhoods and other confounding effects. Findings show that TODs have the potential to reduce CO2 emissions for work and school trips, but not for other non-work trips in Dhaka. While the results partially verify the environmental sustainability outcome of TODs, how to design TODs to capitalize full environmental benefits remains a challenge for planners in developing countries.