Preparing future generations to tackle complex sustainability challenges is an essential educational goal. However, traditional approaches often fail to cultivate the necessary problem-solving skills. This paper explores how integrating place-based education (PBE), environmental psychology, and Knowledge-Based Urban Development (KBUD) can create a comprehensive sustainability learning framework. PBE emphasizes direct experience and focused reflection within local contexts, fostering deeper connections. Environmental psychology offers insights into the cognitive, behavioral, and emotional aspects of human–environment interactions. KBUD prioritizes economic, environmental, and social sustainability, recognizing the environment as a crucial partner in innovation. By leveraging situated cognition, this study identifies three blind spots in current sustainability education practices and examines how KBUD can provide a platform for effective place-based sustainability education. These blind spots include detached Knowledge, individual learning, and passive learning. The findings suggest that KBUD has the potential to address these blind spots by bridging knowledge gaps, empowering action and collaborative solutions, and promoting the acquisition of situated knowledge to tackle local sustainability challenges. This integrated approach can contribute to the development of a more robust and engaging educational strategy for a sustainable future.