Project boundary setting and leakage treatment are two important issues to be considered when a clean development mechanism (CDM) project is being designed. There are still many uncertainties con- cerning these two issues. This paper reviews the concepts of project boundary setting and leakage in CDM projects, cites the types and sources of leakage, discusses the principles for determining leakage, and gives some proposed methods for dealing with leakage. A case study, using several steps to solve the boundary and leakage problems,shows how the analyzed principles and treatments can be implemented in a real project. Based on the result of the case study, the methods discussed are shown to be appropriate for set- tling leakage issues. Project boundary setting and leakage treatment are two important issues to be considered when a clean development mechanism (CDM) project is being designed. There are still many uncertainties con- cerning these two issues. This paper reviews the concepts of project boundary setting and leakage in CDM projects, cites the types and sources of leakage, discusses the principles for determining leakage, and gives some proposed methods for dealing with with leakage. A case study, using several steps to solve the boundary and leakage problems, shows how the analyzed principles and treatments Based on the result of the case study, the methods discussed are shown to be appropriate for set-tling leakage issues.