Sustainable　development　goals　of　cities　have　long　been　threatening　by　the　low　efficiency　and　negative　externalities　of　the　truck-dominant　forward　and　reverse　physical　distribution　activities.　Aiming　at　conquering　the　dilemma,　this　paper　offers　a　novel　integrated　underground　logistics　system　(IULS)　solution　that　has　good　applicability　to　incorporate　the　wholesale　automated　operations　of　construction　and　demolition　waste　(CDW)　collection,　municipal　solid　waste　(MSW)　collection,　and　parcel　deliveries.　In　line　with　a　Chinese　on-going　new　urban　district　development　project,　the　prototypes　of　IULS　including　network　topology,　facility　operations,　handling　workflows,　and　transport　technical　parameters　are　designed.　An　empirical-based　method　is　proposed　to　estimate　the　demand　flows　of　heterogeneous　CDW　and　parcels　for　IULS　planning.　Based　on　a　well-designed　multiperiod　network　expansion　mechanism,　a　bi-objective　dynamic　programming　model　is　established　to　characterize　the　optimal　location-allocation-routing　decisions　of　IULS　network　at　minimal　construction　and　operating　costs.　Given　the　computational　complexity,　a　hybrid　optimization　approach　combining　variable　neighborhood　search　based　memetic　algorithm,　Kruskal＇s　minimum　spanning　tree　algorithm,　and　A-star　algorithm　is　developed　to　obtain　high-quality　model　solutions.　Simulation　based　on　real-world　case　is　conducted　to　validate　our　planning　techniques.　Results　show　that　the　dual-use　and　multi-period　expansion　of　IULS　network　can　save　millions　of　dollars　of　annual　environmental　governance　expenditures　for　a　satellite　city　with　substantial　rebuilding　and　distribution　needs.　By　analyzing　the　facility　configurations　and　cost-benefit　performance　of　the　optimized　network　solutions,　a　set　of　insights　related　to　the　best　layout,　economic　feasibility,　and　long-term　development　for　the　prospective　IULS　network　initiatives　are　disclosed.