This study focuses on Malaysia’s involvement in South-South cooperation from 1986 to 1996. South-South cooperation is defined as the strategy used by developing countries to promote economic independence, to increase self-reliance, and to improve bargaining power with the developed nations. Malaysia, particularly its Prime Minister Dr Mahathir Mohamad, has been actively involved in South-South cooperation for more than a decade. The study attempts to identify and analyse the determining factors and the implications of Malaysia’s involvement in South-South cooperation. The significance of this study lies in the fact that there has not been any thorough study on Malaysia’s involvement in South-South cooperation. This study attempts to address four critical issues. What are the factors that influenced Malaysia’s interactions with developing countries and the implications of the relationship to both parties? What are the impacts of Mahathir’s leadership on Malaysia’s involvement in South-South cooperation? What are the factors that influenced Mahathir’s involvement in articulating the North-South issues and what are the implications of his actions? Finally, what are the prospects and problems of Malaysia’s economic relations with developing countries, particularly with Indochina states and South Pacific countries? In the context of determining factors, although many factors have contributed to Malaysia’s involvement, nation’s national interests, external factors and leadership variables are argued to be more significant. The study also argues that Malaysia’s high profile in voicing the North-South issues and its private sector involvement in the South has created resentment from several parties, especially from the NGOs, the Western media, the regional powers and local business groups. Finally, the study detected that South-South cooperation is an effective means for Malaysia to enhance its own economic interests. For the case of Malaysia’s relations with the Indochina states and the South Pacific countries, the study found that Malaysia's economic interests has been a crucial determinant of the depth of the relationship. In terms of economic interests, Indochina states are more promising to the relationship than the South Pacific region. It is hoped this study will be a significant contribution to the study of Malaysian foreign policy, particularly on Malaysia’s relations with Third World countries.