Given the advent of knowledge-based economies and virtual-enterprise business models, enterprises get the knowledge not only from themselves but also from others. Distributed case-based reasoning systems (DCBRS) play important roles in knowledge-driven virtual enterprises by supporting knowledge sharing. This study develops a novel mechanism for ontology-based distributed case-based reasoning using ontology and a proposed multistage algorithm to effectively support knowledge sharing within a virtual enterprise environment. Tasks involved in this study are as follows: (i) design an ontology-based distributed case-based reasoning architecture and procedure, (ii) develop techniques related to the ontology-based distributed case-based reasoning, and (iii) implement an ontology-based distributed case-based reasoning mechanism. Developing methods associated with ontology-based distributed case-based reasoning involves the definition and representation of a user query model, definition and representation of a knowledge case model, definition and establishment of knowledge case index structure, and development of a distributed knowledge case retrieval and knowledge case adaptation methods. Study results will facilitate heterogeneous knowledge sharing among enterprises participating in a virtual enterprise.