Taiwan is currently shifting from labor-intensive to knowledge-intensive economy. However, the transformation process is still not very effective. Although she has been placed on the top in the world in some product areas in terms of outputs, the value added and profits from the business operations remain low per se. One of the critical ways to improve the situation is to enhance the level of technological sophistication. To encourage research cooperation between industry and university is thus regarded as the major approach to obtain the objective. Nevertheless, the issue and related practices are new to most of the policy makers and academic researchers in Taiwan. The study is to explore this issue through (1) extensive literature review; (2) Investigation of the major participants in the university-industry research cooperative system; and (3) case studies. The preliminary findings from the study include: (1) For government, it needs to help set up “intermediaries”, establish research centers oriented for industrial technologies, and delegate the ownership and rights of research results to universities or companies; (2) As to university, it is better to build a patenting and licensing office in order to enhance the technology transfer performance; (3) For the industrial corporations, they have to better leverage external sources of technologies, to build long-term relationship with universities, and to establish internal competence.