The smart transportation system (STS) leverages ubiquitous and networked computing to improve the efficiency of urban mobility. Whilst existing IS work has explored various factors influencing STS development, there is a lack of consideration of how value can be created for building a more sustainable STS. Drawing upon the value co-creation theory and stakeholder theory, we seek to understand the socio-technical shaping of the STS ecosystem and how government, firms and citizens collaboratively create sustainable value for designing and implementing STS initiatives. To reach this aim, we carry out a longitudinal case study over 2016–2018 in Shijiazhuang, China. We offer both theoretical and practical explanations on (i) key value facets with regard to sustainable STS design and implementation; and (ii) a holistic view of iterative value co-creation process pushed by key stakeholders. This study makes particular contributions to the IS, marketing and transportation literature by offering a critical understanding of the social dynamics for shaping a big data-driven STS ecosystem.