Urban settlement faces unprecedented challenges in the pursuit of sustainable development. This study navigates the complex interplay between policies and governance frameworks to uncover innovative methods to transform settlements into thriving, equitable, and resilient spaces for promoting sustainable futures. This research tries to explore the impact of governance and policy dynamics, employing a multidisciplinary lens considering environmental sustainability, social inclusivity, and economic vitality components of urban policy innovation in shaping the livability of settlements, with a specific focus on Andhra Pradesh. This research identifies key initiatives, experiments, and transformative policies and the role of local governance and technological interventions in crafting a sustainable urban fabric that have contributed to enhancing the livability of settlements in Andhra Pradesh. Furthermore, the research engages in comparative assessments, merits and demerits of Andhra Pradesh's policy and governance practices. And concludes by offering actionable insights to shape sustainable futures for Andhra Pradesh's settlements by highlighting successful policy innovations and governance strategies.