The advance of knowledge technology has facilitated the creation of the internet society and accelerated the pace of globalization and the coalescence of a knowledge economy. In this era of globalization and knowledge economy, with the global village integrated through the world-wide web, the nature, role, and functions of government have all been subjected to intense challenge. Aside from the traditional responsibilities set for governments to deal with, now governments must meet new changes in the external environment, changes requiring adjustments in concepts, systems, manpower, internal processes, and laws and regulations – changes needed in order to elevate the ability to govern and to produce results of governance that are more in accord with the public will. This essay takes the significance and development of knowledge-based government as its subject in discussing these issues. In 2001 the United Nations produced a report designating the domain of government as a knowledge-intensive service industry; all those employed internally in government should be encouraged to consider themselves knowledge workers. Although the term knowledge-based government is not yet used universally, it can still be seen quite correctly as a definition of the content and direction of future development. “E”-transformation serves as the knowledge exchange platform for the learning organization’s knowledge management system. Here the learning organization is the departments internal to government. This transformation is vital in that it stimulates creative abilities for research and development, raises the quality of internal manpower, and infuses the governmental organization with a culture of innovation, all of which are indispensable to further advance. In addition to discussing knowledge-based government in general, this essay in particular locates and analyzes six aspects of the development of knowledge-based government.