Slow progress in municipal waste reduction and landfill space scarcity lead to numerous environmental problems in Indonesia and developing countries. Surabaya, the role model of an environmental management city in Indonesia and other countries, is no exception. Despite the situation, Surabaya’s initiative of deploying a distributed materials recovery facility (MRF) and its performance in recovering recyclables show a potential to be developed for addressing the landfill waste reduction issues. This study proposes a new strategy with small-sized distributed MRFs to achieve 30% landfilled waste reduction and reducing greenhouse gas (GHG) emissions, focusing on Surabaya as the case study. Scenario 1 merged three pairs of transfer stations which shows some indistinguishable optimizations and failed to meet the target. Both Scenario 2 and Scenario 3 added six years of landfill lifetime for reaching the target. However, the distributed MRF system and different transportation systems in Scenario 3 accomplished the goal with only 24 new MRFs, whereas Scenario 2 needs to upgrade 48 transfer stations into MRFs. Scenario 3 decreased the GHG emissions generation by 29%, possibly contributing to Indonesia’s GHG emissions target of 0.2%.