Transaction cost is the core concept in new institutional economics. The concept can be applied in the study of cross-strait economic relations. The transaction cost of the cross-strait relations includes information gathering costs, the consultation and negotiation costs and supervision and implementation costs. And these costs will be of great influence to the development of cross-strait economic relations. The sensitivity of the system consistency, transparency in decision-making, the degree of specialization, degree of uncertainty, and the transaction frequency are the main factors in the transaction costs of cross-strait economic relations.