Sino-US strategic and economic dialogue (S&ED) mechanism is based on the combination of Strategic Economic Dialogue (SED) and Strategic Dialogue (SD). It is the highest official level dialogue in the two countries’ 60 more governmental communication dialogues. As we know the relationship of China and the U.S. has been infested with a large number of issues including trade, security, energy and human rights disputes. And the purpose of S&ED is to manage these problems at the top level. Therefore the thesis will focus on what role the S&ED plays in China-US relations and the effectiveness and limitation of S&ED in fulfilling the objective of managing disputes in the relationship. The approach adopted in the study includes documentary analysis and case study. First, the thesis tries to elaborate the development of the dialogue mechanism; second, it does case studies respectively on the RMB issue and the North Korean Nuclear issue in order to analyze the roles of S&ED played in resolving critical and controversial issues. The findings of the study show that S&ED is useful in promoting mutual understanding, identifying common interests and reducing difference and misunderstandings. However, the dialogue has not been effective in finding solutions to disputes on issues related to core national interests of both countries. The thesis concludes that S&ED, while serving some useful functions, is still more an empty talk than an effective trouble-shooter. Yet with the good-faith efforts on both sides, S&ED still has the potential to increase mutual trust and reduce divergence between the two countries.