Most of wastewater treatment plants (WWTPs) in developing countries comprised primary and secondary treatment without including any tertiary treatment or sludge processing. Decision makers think that additional treatment is costly and the gained environmental benefits are limited. This study aims to investigate the environmental and economic benefits of improving current conventional WWTPs in developing countries by adding tertiary treatment and/or anaerobic digestion of sludge. For this purpose, life cycle assessment (LCA) for four different scenarios was studied for a wastewater plant located in Gamasa, Egypt. The 1st scenario is the plant in its current state. The 2nd scenario is the addition of anaerobic digestion of sludge. The 3rd scenario is the addition of a tertiary treatment stage. The 4th scenario is the addition of anaerobic digestion of sludge and tertiary treatment stage. CML 2000 method was used for assessing the environmental impacts of the four scenarios. The 4th scenario attained maximum environmental benefits for all categories due to the energy saving and the prospect of water reuse. The application of the 4th scenario achieved environmental benefits in some important categories such as ozone layer depletion. According to the economic evaluation, the addition of tertiary treatment leads to gain financial profits due to the value of the reusable produced water. This study underlines the importance of considering LCA in development of WWTPs in developing countries.