The purpose of this paper is to explore how the institutional change of urban renewal occurs in Taiwan from 1964 to 1999 based on the New Institutional Economics, viewing an institution change as a shift from one equilibrium to another. This paper divides the research period from 1964 to 1999 into two stages, so as to identify and analyze the cumulative step change process of institutional change and the relationship among political change, social change and economic change. The result of this research is that the urban renewal change in the first stage is due to the transaction cost of institutional design and the urban renewal change in the second stage is due to the competition among political parties.