Since the British mandate, particularly after the foundation of the Palestinian National Authority (PNA) in 1994, Palestine has been witnessing enormous political, economical, social and cultural transformation reflected in residences' forms moving from introverted into extroverted schemes. In general, contemporary housing is poorly responsive to local conditions and also failed to meet the dwellers' expectations. Moreover, this modern transformation has caused an obvious divorce between the internal and the external spaces (balconies, verandas and yards). Herein, the vital connection between these spaces has been lost compared to the traditional courtyard houses where they formed an extension of each other. This paper investigates the concept of outdoor spaces in contemporary and traditional housing in terms of sustainability. The socio-cultural, economical, functional and environmental dimensions were examined to find out the feasibility of reviving the courtyard concept in the future designs. Survey results of (300) modern dwellings of different housing typologies (detached/apartment flats) and the analyzed characteristics of traditional architecture, were the base for a comparative study between traditional and contemporary outdoor spaces' features in two different climatic zones Palestinian cities. Results of paper demonstrate that the traditional outdoor spaces are culturally, economically and environmentally responsive designs that could be reintegrated in terms of sustainability in future Palestinian housing. Traditional architecture is still the source of inspiration to every environmentally and culturally responsive housing, and a short path to enhance the inhabitants' quality of life.