The Shanghai Free Trade Zone was launched on September 29, 2013. In light of this development, this paper is aimed at discussing the internal and external motivations of the launch and analyzing the domestic and international legal impacts. The discussion will be divided into three sections. The first section introduces the background of the Shanghai Free Trade Zone. In particular, this section analyzes basic legal documents such as: the Framework Plan, Appendix to Framework Plan and Negative List. The second section focuses on internal and external motivations. Internally, there are three types of predictions on the relationship between China’s launch of the Shanghai Free Trade Zone and political reforms. Externally, there is an on-going evolutionary trade system beyond the WTO, which depends on negotiations of Trans-Pacific Strategic Economic Partnership Agreement (TPP), Trans-Atlantic Trade and Investment Partnership Agreement (TIIP), Trade in Services Agreement (TISA) and Bilateral Investment Treaties (BITs). China has lagged behind in recent years. Currently, China is adopting new policies to gain leverages on such negotiations worldwide. Finally, the third section analyzes the domestic and international legal impacts of the Shanghai Free Trade Zone. Domestically, it has an impact on both legislative procedure and the distribution of central and local legislative powers. Moreover, it has influenced the judicial power and legal practitioners. Internationally, the comparison between Shanghai Free Trade Zone and WTO, Taiwan, Hong Kong and Shenzhen Economic Special Economic Zone respectively indicates how this policy might influence China’s obligations under international and regional treaties.