This paper empirically investigates how Korean multinational enterprises’outward FDI influences intra-industry trade(IIT) at the various KoreanStandard Industrial Classification(KSIC) levels. Using panel data covering FDIto US and China between 2001 and 2009, this paper finds a positive andsignificant relationship between IIT and FDI at the KSIC middle level, evenafter controlling for intra-industry firm heterogeneity, factor and skillendowments, and home and host country trade costs. In particular, outwardFDI accounts for 33% of IIT in manufacturing between 2004 and 2009. It isstronger at the electrical, electronics and motor vehicles than at the othermanufacturing sectors.