With the step-by-step perfection of rail transit network in Shanghai, its daily average passenger flow tends to stabilize and the conventional ground public transport passenger flow goes down year by year, which affect the stability and growth of the total public transport passenger volume. By studying the current needs of public transport and the urban development planning requirements in Shanghai, it is clear that the medium-capacity transit system is of great significance for improving the level of public transport system, enhancing the attractiveness and service quality of public transportation. According to the different urban development levels and public transportation demands, aiming at the main urban area of Shanghai and the outer town circle, the functional positioning, planning principles, and recommended format of the medium-capacity transit system are put forward.