Although, Mongolia carried out “E-Government Mongolia” national programme in 2005-2012, the National Programme to develop Integrated Registration System in 2008-2012, and the E-Governance National Programme in 2012-2016, the operation to separate information communication networks and services could not be successfully completed. The main reason is the inertia of mentality of the previous system to continue the state ownership of databases of all types, to monopolize of all profits for the government and to use for exercising power in implementing activities in information and communication sector resulting in ineffectiveness of political system and governance. In order to assess the digital governance issues and challenges of Mongolia, we intend to analyse policy documents, and conduct case research and make an inductive conclusion. First, we examined the implementation of the Government policy of Information and Communication Development. The Government of Mongolia prioritizes the following 6 tasks towards the development of the sector development. These include: a) legal framework, b) networks and infrastructure c) service d) innovation and research, e) production, f) investment and competition g) information security and h) e-governance. Therefore, we aimed to examine the implementation of these tasks, their stages, and their mutual dependence. Second, to evaluate the overall implementation of the E-Governance, we analyse historical development, political decisions regarding e-governance, legal framework, and negative consequences in government service and information transparency through cases. Large majority of the population (78.2%) or 2,602,000 people use internet and social networks. This indicates that there is very high internet usage among the adult population. To be more precise, individuals between the ages of 14 and 64 constitute 64.4% of the population, indicating a significantly high proportion. There are 496 government services that are provided online. Among other services, most widely used digital services include: one stop service, Electronic kiosk of government service, “Khur” government information exchange system, “Dan” recognition and access system, E-Mongolia, and E-barimt application . Our research findings suggest the following conditions for the major difference of above-mentioned quantity and percentages, slow progress of digital transformation. These are: Legal environment for digital services is not established; Open databases are not accessible, only government can use them; Although government services can be provided online, society has not yet recognized its security and still tends to demand for paper-based certification; Information security is not guaranteed; Databases are only used for government decisions, but frequency of sudden changes in the information security level sets up the various discrimination in the society. The key findings of the research indicate the difference between the above-mentioned figures is large and the digital transformation is not effective due to the following conditions.In conclusion, the lack of a legal framework for e-government is caused by the lack of a unified public management or absence of central ministry on the relevant policy. Due to the lack of coordination between the use of the database and other policies, citizens are obliged to provide in-person services by government agencies and provide additional paper documentation. The fact that the usage of digital signatures is limited, with only a small percentage used in public tenders and banking services, is becoming the main pressing issue.