To coordinate with the government in its review of the first phase in the privatization of the water industry which is deregulation, this research is undertaken by the Taiwan Water Supply Corporation and the Taipei Water Department to probe into the Feasibility Study on the Deregulation of the Public Water Industry Market in Taiwan”. The former is a state-operated corporation under the control of the state-operated corporation, while the latter is subordinated to the Taipei Municipal Government. Thus, any action on the part of the Taipei Water Department requires the approval of the Taipei City Council because the water industry is considered a local public affair; as far as its benefits are concerned, unlike the Taiwan Water Supply Corporation which has a financial deficit, the Taipei Water Department is unwilling to participate in reforming the structure of the market. With reference to experiences from other countries, a British enterprise, for instance, is the only water supplier that sells in large quantities to the whole nation, and it has been bringing privatization into effect. Other countries, like the USA, Australia, and Japan, have not yet started to do so, but they are have, nevertheless, begun to adopt measures such as Build-Operate- Transfer (BOT) or the collaboration of the government and local people operating together to increase operating efficiency and the quality of service, and reduce government expenditures. There, the upper courses of the water industry (water resources development) are mainly operated by the government, but the mid- and lower courses might be led by the BOT, which is the collaboration between the government and private companies, or the Build-Own-Operate (BOO) system. However, as their first mission in deregulation, it is required that the water industry consider making the price of water reasonable. In addition, according to Article 13 of the Water Supply Law, the analysis of the basins of water sources and economic scale should be taken into consideration, and the plan for domestic regional operations should be reviewed so as to improve the mechanism of competition. In the short and mid-term, the local water industry should either review and expand the scope of the business authorized to private companies, or further develop the BOT system, or the government should cooperate with private companies, drawing up relevant means of management and supervision, and in the end, deciding on the optima Timing-- depending on the effects-- to encourage privatization.