This study seeks to determine the effect of lean accounting implementation on the financial performance of manufacturing firms operating in Bethlehem and Hebron. It examines manufacturing companies functioning in an unstable environment, shaped by the economic and political situation, which affects their financial performance and sustainability. The primary data is derived from questionnaires distributed to a sample of 60 manufacturing companies in Bethlehem and Hebron. Linear and Multiple Regression Analysis, using the Statistical Package for Social Sciences (SPSS), is employed to analyze the research questions. The researchers found a positive and significant relationship between the use of lean accounting tools, such as target costing, and the improvement and development of firm financial performance. This research recommends the further development of lean accounting tools due to their significant relationship with firm performance in the manufacturing sector in Palestine. Additionally, it underscores the necessity of providing knowledge to production supervisors and workers regarding the importance of lean accounting tools.