Tram is a sustainable mode of transport, which is able to transform the modern city centers through the various urban regeneration projects that usually come together with it. Tram tracks are often shared with either motorized traffic or pedestrians/cyclists. In this mixed traffic reality, tram accidents are very rare but severe at the same time. Tram driving is really a complex and very demanding task, since the driver should run on time, maintain his/her concentration, predict the behavior of other road users and protect the tram passengers from falls inside the vehicle cabin. In the past, a limited number of studies has attempted to examine tram safety, especially in urban areas, where trams interact with vulnerable road users (VRUs). Subjective notions of traffic safety, that are more connected with the behavior of tram drivers, such as: perceived safety and driving stress, have never been quantified. This thesis covers all the previously mentioned research gaps in order to explain tram safety problems. By utilizing the new knowledge, a list of practical recommendations, which can reinforce tram safety without downgrading system efficiency, is developed. For the development of statistical models related with perceived safety and driving stress, a stated preferences experiment was conducted in Athens. In the survey, tram drivers rated perceived safety and driving stress in a 7-point Likert scale. According to the estimated model of perceived safety, non-exclusive alignments, such as tram/pedestrian malls and mixed traffic operation, downgrade perceived safety. Furthermore, the existence of an unprotected pedestrian crossing and high volumes of VRUs influenced perceived safety negatively. Driving stress is affected mainly by arrival delay and load of standing passengers. Route familiarity is an additional important factor that influences driving stress. The existence of many random beta parameters in perceived safety and driving stress models confirms the subjective nature of these notions. No statistically significant correlation between these two previous notions was observed. Experienced tram drivers believe that they are ready to respond properly in a section that they perceive as unsafe, if they are familiar with it. If there is no familiarity, tram drivers lack confidence and therefore driving stress is increased. Objective safety was examined in the tram network of Amsterdam using accident records and spatial data, such as location of stations and pedestrian/cycling crossings, level of tram lines separation, cycling intensity, city attraction poles and city districts. In Amsterdam, more accidents per km appeared in tram/pedestrian malls; yet, most of the fatal accidents have occurred in tram tracks that are not shared with other road users. High concentrations of tram accidents were also observed around attraction poles and inside the city center, where the flow of VRUs is quite high. Lastly, as a practical recommendation, a consistent design of a tram line using the knowledge from the estimated perceived safety and driving stress models is developed for the first time.