This book mainly demonstrates the sovereignty over the Diaoyu Islands, illustrates the significance, approach and means of peaceful settlement of the Diaoyu Islands dispute, and clarifies China’s principal stand on the Diaoyu Islands issue. According to mode of territorial acquisition, the critical date and the inter-temporal theory in international law, the Diaoyu Islands had been China’s territory rather than terra nullius or a part of Ryukyu before 1895. Therefore, Japan could not acquire the Diaoyu Islands by occupation. Instead, Japan acquired the Diaoyu Islands by cession during the Sino-Japanese War in 1895. In light of the situation and inter-temporal law of the critical date, China resumed her sovereignty over the Diaoyu Islands after WWII. China beyond any doubt enjoys the sovereignty over the Diaoyu Islands. China upholds the principle of peaceful settlement of the Diaoyu Islands dispute and strongly opposes settling the dispute by means of violence. Studies show that the settlement of the Diaoyu Islands dispute can be analyzed and studied in reference to the operational mode of the International Court of Justice, and China and Japan should take the Franco-German reconciliation model to resolve the Diaoyu Islands dispute politically.