Abstract In 2010, a Chinese fishing vessel ¡§Min Jin Yue No.5179¡¨ collided with Japanese patrol boats in Diaoyutai. The Japan Coast Guard arrested the captain of the Chinese vessel for the violation of Japanese ¡§Fisheries Act¡¨. China reiterated again and claimed that Diaoyutai fishing incidence is in Chinese territory. This incidence has resulted in the Diaoyutai sovereignty dispute on the international community. The Diaoyutai sovereignty dispute has been exist dated from 20th century into 21st.. The problem is that countries of dispute have their own national sovereignty claim. Japan claims that the Diaoyutai was included in the return area to Japan for the US-Japan Agreement to return Okinawa in 1971. By this, Japan starts harshly to prohibit both Taiwan and Chinese fishing boats into this area. This has resulted in many accidents occurring among Japan, China and Taiwan. The present study assesses and analyzes the conflicts of Diaoyutai waters associated with the attitude of China and Japan on dealing with the dispute, such as the diplomatic confrontation of China-Japan; the Japanese government quoted the wrongly legal custody of detained Chinese fishing boat captain; China postponed conference of cooperative exploitation ¡§Chunxiao Oilfield¡¨ with Japan; suspended increased flights and expanding aviation rights etc., in addition to a series of implement of political and economic sanctions, these has triggering global concerns. China practiced rare earth embargo for Japan that had probably resulted in explosive potential global trade war. Therefore, the present study has also research into the international case studies of their ruling, as examples, on resolving the sovereignty dispute. As a result of inducing settled methods and models for the island¡¦s sovereignty dispute, the present work has resulted in the deduction of ideas, suggestions and prospects to the problem of Diaoyutai especially the suspensive sovereignty and residual sovereignty issues.