The concept of transaction cost introduced by Ronald Coase has become the core of the New Institutional Economics .It not only provides a new perspective for the analysis of general economic theory ,but also has strong explanatory power for the practical economic phenomenon , in the transition countries in particular .Transaction Cost Theory (TCT) has become a hotspot in economics and related disciplines .A comprehensive summary and review on TCT will contribute to its further development . The ideas of″transaction″ by Aristotle and Commons ,and″transaction incurred costs″ by Gounod and Marx are the ideological origins of the concept of″transaction cost .″ The proposal term of″transaction cost″ is a great challenge to the neoclassical economics that treats the enterprise as a″black box .″ Today ,the transaction cost theory is widely used to explain a number of different behaviors and it attracts increasing attentions in both academic researches and policymaking . Various broad definitions of the phrase″transaction cost″ are used in literature from different viewpoints .This paper clarifies them as transaction division ,transaction contract ,transaction dimension ,institutional cost and transaction behavior . A comparison and summary of these viewpoints outlines an overall picture from different angles and enhances the understanding of TCT .Transaction costs consist of five major components : searching cost ,negotiating cost , contracting cost ,monitoring cost and enforcement cost .In addition ,we distinguish the concept of the″transaction cost″ from the″production cost″ and″circulation cost .″ The measurement of transaction cost is critical at the empirical level .Arguably ,there is no consistent approach to measure the exact value .For most macro analysis ,transaction cost is overestimated and this bias shows increasing trend over time .The assessment for transaction cost at a micro-level mainly focuses on some specific sectors/firms .The evaluation on public sector is relatively rare .However ,most studies exhibit a high proportion of the transaction cost in total costs ,which call for the importance to cut the transaction cost . TCT promotes the development of the state theory ,industry theory and the theory of firms .Also it provides a solid foundation to test the reliability and robustness of these theories .As the core of the New Institutional Economics ,TCT is expected to yield innovative outcome in multidisciplines ,such as the technique development of the measurement of transaction cost ,the application of TCT on transition countries ,the policy implication and guidance for China,s reform and so on .In a word ,the development of TCT is worthwhile and requires further in-depth inputs .