There are two reasons why the regional economic integration of the Yangtze River Delta has been so fast. One is the location advantage, and the other is the favorable institutional environment. The economic integration of this region derived its vitality from distinctive modes of local development as well as the impetus from both market and government, and its primary process is the optimization of resource allocation. In spite of the interregional division of labor and close cooperation in the Delta, its economic integration is still impeded by some bottleneck. The paper points out that the future of Yangtze River Delta depends on institutional innovation in regional interaction, distribution of benefits and policy integration.