This paper deals with the procedure and methodology which can be used to select the optimal treatment and disposal technology of municipal solid waste (MSW), and to provide practical and effective technical support to policy-making, on the basis of study on solid waste management status and development trend in China and abroad. Focusing on various treatment and disposal technologies and processes of MSW, this study established a Monte-Carlo mathematical model of cost minimization for MSW handling subjected to environmental constraints. A new method of element stream (such as C, H, O, N, S) analysis in combination with economic stream analysis of MSW was developed. By following the streams of different treatment processes consisting of various techniques from generation, separation, transfer, transport, treatment, recycling and disposal of the wastes, the element constitution as well as its economic distribution in terms of possibility functions was identified. Every technique step was evaluated economically. The Mont-Carlo method was then conducted for model calibration. Sensitivity analysis was also carried out to identify the most sensitive factors. Model calibration indicated that landfill with power generation of landfill gas was economically the optimal technology at the present stage under the condition of more than 58% of C, H, O, N, S going to landfill. Whether or not to generate electricity was the most sensitive factor. If landfilling cost increases, MSW separation treatment was recommended by screening first followed with incinerating partially and composting partially with residue landfilling. The possibility of incineration model selection as the optimal technology was affected by the city scale. For big cities and metropolitans with large MSW generation, possibility for constructing large-scale incineration facilities increases, whereas, for middle and small cities, the effectiveness of incinerating waste decreases.