The paper deals with reform in the evaluation system, referred to as Institution Evaluation (IE), of the government of the Republic of Korea. IE was launched as a response to a variety of forces demanding improvement of performance and accountability in government. Major change was introduced basically in three aspects of evaluation. One change is reflected in the shift of focus of evaluation from policy to institution as a whole. Another important change is observed in the shift from progress monitoring to outcome evaluation in policy evaluation. The third change is found in involving citizens in the evaluation process. IE consists of ①policy evaluation, ②evaluation of policy implementation capabilities, and ③surveys of customer/citizen satisfaction with both administrative services provided and policies implemented. Policy evaluation addresses the evaluation of what governmetn agencies do; evaluation of implementation capabilities addresses the evaluation of the capabilities of government agencies to put into effect what they planned to do; and surveys of customer/citizen satisfaction measure the level of satisfaction with both administrative services provided and policies implemented. Looking back over the two-year history of IE in the Korean government, it appears to have worked relatively well. It seems that a number of factors have contributed to its effective operation. The hard working members of an evaluation group in the OPM backed by Prime Minister's leadership have been the most important driving force. Without the support of the top management, it would have been very difficult to persuade the ministers and agency heads to make their respective organizations be subjected to evaluations by outside evaluators of IE. The regulation on Evaluation and Coordination of State Affairs also has provided necessary legal support for those in charge of performance evaluation in the OPM to put IE into effect. However, IE currently practived in the government of Korea has many limitations as well as strengths. So in order for IE to overcome those limitations and achieve its potential to improve performance and accountability in government, some further actions as suggested in the last part of the paper need to be taken.