This case study on the experience of the University of Peking, China, in inter-university cooperation describes the process of identifying appropriate partner institutions and implementing collaborative programs with them. It also highlights a number of lessons for those managing inter-university cooperation and shows how such initiatives can be implemented successfully. The case study shows that inter-university cooperation is one of the effective ways to raise the internal efficiency of universities and also one of the best ways to increase the external efficiency of universities. For developing countries, inter-university cooperation at the international level is a way to cope with the "brain drain" problem. Inter-university cooperation is also a way to raise the overall academic level of teaching and research at universities. It is preferable to take an incremental approach to implementing inter-university cooperation instead of trying to do too much in one step. An appendix contains an inter-university agreement between the University of California and the University of Peking. (Contains 2 figures, 7 tables, and 26 references.) (SLD)