This study intends to analyze environmental and policy factors contributing to e-commerce diffusion in the US, Germany, Japan and Indonesia. A substantial portion of this analysis is based on the papers provided by Gibbs (2003) and Kraemer (2006) which offered framework to analyze e-commerce activities. This study consists of four chapters. Chapter 1 focuses on literature review starting with definition of e-commerce based on some references, e-commerce types and e-commerce payment system. Chapter 2 covers the conceptual framework of environmental and policy factors shaping e-commerce diffusion. In addition the Chapter also proposes additional factors that responsible for e-commerce diffusion. Chapter 3 investigates the e-commerce evolutionary process and experiences in U.S.A, Germany, Japan and Indonesia. By using case study, the chapter investigates interdependence between the environmental and policy factors contributing to e-commerce diffusion in the selected countries. Finally, Chapter 4 ends with conclusion based on international comparison and proposals for e-commerce in Indonesia.