Advanced approaches towards defense management, and the process of the ongoing force transformation in particular, rely to a great extent on Capabilities-Based Planning (CBP) to provide for robust response to a broad spectrum of threats and challenges. Our assumption is that CBP has considerable potential to enhance initiatives for security sector transformation. This paper outlines a planning frame­work, based on centralized planning and agency-based development of security sector capabilities. It links objectives, security ambitions, planning scenarios, tasks, required and affordable capabilities, and planning risks. The distribution of capa­bilities among security sector organizations accounts for their traditions, experi­ence, and current roles, but focuses on cost effectiveness. The development of ca­pabilities is subject to regular monitoring, assessment of gaps and risks, and coor­dinated decision making on corrective measures. Then, the paper presents possible levels of integration of the security sector. The conclusion is that coordinated capa­bility development, with capabilities-based planning as its central feature, should be seen as the core process in security sector transformation.