Sorting permutations by transpositions is an important problem in genome rearrangements. A transposition is a rearrangement operation in which a segment is cut out of the permutation and pasted in a different location. The complexity of this problem is still open and it has been a ten-year-old open problem to improve the best known 1.5-approximation algorithm. In this paper we provide a 1.375-approximation algorithm for sorting by transpositions. The algorithm is based on a new upper bound on the diameter of 3-permutations. In addition, we present some new results regarding the transposition diameter: We improve the lower bound for the transposition diameter of the symmetric group, and determine the exact transposition diameter of 2-permutations and simple permutations.