The purpose of this paper is to offer a new and more reasonable interpretation of Li Chi-Li Yun (《禮記.禮運》) and ,by means of the interpretation, to argue that the main content of Li Yun can be seen as a further development of the Confucianism in the Confucian Analects (《論語》). The main points of the interpretation include the followings: Small tranquillity (小康) is the peace achieved by following the Li (禮) of the world as a family inheritance and employing policies of prevention and prohibition of political disorder or riot. The Grand Union(大同) has nothing to do with the policies of prevention, etc., but is a state of peace in which there is no precondition of the occurrence of political disorder or riot. The passages after the two sections about the Grand Union and Small Tranquillity mainly concern how the Grand Union can be achieved by means of Li. In order to achieve the Grand Union, there is no need to achieve Small Tranquillity first. What is required is only the replacement of the Li of the world as family inheritance by the Li of the world as being public, and in turn involves the theory of the nature and function of Li and the theory of Li Yun. The nature of Li is seen in its being rules representing Tian (天) and regulating Ren Qing (人情) or the human feelings, while its main function is to achieve the best situation in human living in general and the Grand Union in particular. The main point of the theory of Li Yun is that Li can be established, modified or replaced if the objective standard of Yi (義) or what is right is reached. A specific way to achieve the Grand Union, which does not need to achieve the Small Tranquillity first, is to replace the specific Li of 'the family inheritance of state and titles' (belonging to the Li of the world as a family inheritance) by the specific Li of 'choosing people of virtue and ability' (belonging to the Li of world as being public). Moreover, this paper comments on four different interpretations of Li Yun or its main themes, and proves that the interpretation presented here is more reasonable. It also refutes three different views which state that the theories of the Grand Union and Small Tranquillity are incompatible with the basic positions of Confucianism or that they do not belong to the Confucian radition. Lastly, it provides evidence to support that Li Yun can be seen as a further development of the Confucianism in the Confucian Analects.