This paper reviews the development of the ROK policy on North Korea and its relations with inter-Korean economic cooperation over the past 15years. It also briefly assesses the current status of inter-Korean economic cooperation and discusses its future development. In addition, the paper argues as follows. The ROK policy on North Korea consists of three parts: 1) the basic perceptions of the existing DPRK regime, 2) set of prioritized policy goals such as peace, coexistence and unification between the two Koreas, and 3) various policy measures with the most important being inter-Korean economic cooperation. As a result, changes in the perceptions of the DPRK or in prioritizing policy goals on North Korea have had direct impacts on both the pattern and performance of inter-Korean economic cooperation and vice versa. It means that inter-Korean economic cooperation has been fundamentally driven by the ROK government. For future development, however, this governmentled economic cooperation should be converted into a private sector-led initiative that can be relatively free from the changes in South Korea’s policy on the DPRK. This private sector-led economic cooperation will also allow the ROK government to pursue its policy on North Korea in more efficient and rational ways.