The aim of this study is to investigate the role of management accounting systems in promoting innovative performance and improving sustainability in municipal organizations. Given the increasing complexity of urban management, resource constraints, and increasing expectations of citizens from the quality of public services, there is an undeniable need to identify and apply management accounting tools that lead to optimizing resource allocation and improving organizational efficiency. This study is applied in terms of purpose and descriptive-analytical in nature and was conducted with a quantitative approach. Data were collected through a closed questionnaire based on a five-point Likert scale and completed by 150 managers and experts in municipal planning and budgeting. Pearson correlation test and linear regression were used to analyze the data. The findings of the study showed that management accounting systems have a positive and significant effect on innovative performance and sustainable performance of municipalities. It was also found that organizational innovation has a moderating role and strengthens the relationship between management accounting and environmental and economic sustainability. The research conclusion indicates that the transition from traditional financial recording and reporting systems to strategic and green management accounting provides the basis for optimal resource allocation and reduction of negative impacts of urban activities. Accordingly, it is suggested that municipalities focus more on establishing performance budgeting and utilizing non-financial indicators.