Abstract: The paper researches the situation of contradiction between traffic de- mand and supply of Shangyu city,in order to provide practical measures to relief the city's increasingly serious contradictions between traffic supply and demand. The residents trip survey and intersection traffic flow investigation in Shangyu city has been carried out, and reliable road network improvement programs been developed. The analysis discloses the two main problems in the traffic system, the overall road network graded structure is irrational; struc- ture of residents trip traffic is irrational. After the study, the authors provide the guiding strategies to release the tension between traffic supply and demand, including rational controlling and guiding the traf- fic demand, regulating the temporal-spatial distribution of traffic flows, promoting the effective traffic supply, implementation of an integration of planning, construction and management, and paying attention to the sustainable development of urban traffic. Key words: traffic demand; traffic supply; traffic structure; strategies; sustainable development