This study aims to investigate the threshold and nonlinear effects of oil revenues on the relationship between monetary policies and inflation expectations in 34 developing countries over the period 2000 to 2023. Utilizing the Panel Smooth Transition Regression (PSTR) model, the research provides robust evidence of a nonlinear, regime-dependent relationship among the variables. The estimated threshold value for the transition variable (logarithm of oil production) is 3.7222, with a slope parameter of 6250. The findings reveal that in the first regime (low oil production), inflation and exchange rates have a significant and unexpected negative effect on inflation expectations, which can be attributed to recessionary conditions, liquidity constraints, and declining purchasing power. Liquidity exerts a significant positive effect, while economic growth negatively influences expectations. In the second regime (high oil production), the exchange rate has a significant positive effect, liquidity remains positively influential but with reduced intensity, and the interaction terms between oil production and other variables indicate economic stability and the government's capacity to manage the market. Overall, oil revenues play a pivotal role in moderating inflation expectations, and the nature of economic policy effects varies depending on the level of oil production. The results emphasize that the formulation of monetary and fiscal policies should be aligned with oil revenue levels and prevailing economic conditions to enable sustainable control over inflation expectations.