Strategic human resource practices are suggested for its importance to help firms obtain substantive competitive advantage these years. However, workforce differentiation perspectives brought a new paradigm shift of strategic human resource management to have a narrow focus on strategic talent management. While a number of previous studies have suggested the importance of strategic talent management, few have given the clear definition, critical strategic talent management practices and provide empirical evidences. This study developed the strategic talent management practices and examined the influence of strategic talent management system on talents¡¦ capabilities and firm performance. In addition, the mediation effects of talents¡¦ capabilities are also be examined in this study. The data were collected from the 62 medium to large companies across industries in Taiwan. The study results summarize as follows. 1. Firstly, this study identified and developed the five subsystems of strategic job identification, competence training, performance evaluation, development, compensation and benefits with their related practices in strategic talent management system. The preliminary study results provide the reliability and validity evidences to support strategic talent management practices measurement scales as a stable and valid measurement tool. 2. Secondly, this study supported the positive relationship between strategic talent management system and firm performance. The results imply that the intensive use of strategic talent management system leads to positive firm performance. 3. Thirdly, this study supported the positive relationship between strategic talent management system and talents¡¦ capabilities, including behavioral, knowledge, skills and work style capabilities. The results imply that organization can take advantage of investing strategic talent management system to develop the critical talents¡¦ behavioral, knowledge, skills, and work style capabilities. 4. Fourthly, this study partially supported the positive relationship between talents¡¦ capabilities and firm performance. The results imply that talents¡¦ behavioral, knowledge, and work style capabilities have positive influence on firm performance. Organizations should develop talents¡¦ behavioral, knowledge, and work style capabilities to achieve the organizational strategic goals and obtain the competitive advantage. However, the hypothesized relationship between talents¡¦ skill capability and firm performance was not supported in this study. 5. Finally, this study partially supported the mediation effects of talents¡¦ capabilities between the relationship of strategic talent management system and firm performance. The results imply that the mediation effects of talents¡¦ behavioral and knowledge capabilities have significant influence on the relationship of strategic talent management system and firm performance while the mediation effects of talent¡¦s skills and work style capabilities did not meet the significant level in this study. The results still partially supported the mechanism of talents¡¦ capabilities working between strategic talent management system and firm performance. All results implications and suggestions are discussed in detail in the context.