Abstract:Battelle Memorial Institute, the largest independent research organization in the United States, is a non-profit research institute which enjoys the tax exempt status. While operating as a company, it mainly undertakes national tasks. To some extent, it can be considered as a“national”research institute. The unique system and operational mechanism of Battelle Memorial Institute provides a typical case for the study of the relationship between government and market, the modern system of research institutes under the background of the reform of scientific and technologic system. This study reviews the establishment and development of Battelle Memorial Institute, analyzes its market-based operation mechanism through examining the contractual relationship with government, and its internal management system in terms of personnel, funding, industrialization laboratory management, etc. Finally, advices on how to reform China’s research institutes through allowing the decisive role of market are provided.