The challenge of research is to analyze the transition of social policy under Lee Myung-bak government. In other words, the purpose of this article is to find out whether Lee Myng-bak government carried out a retrenchment in social policy during the last three years in power and also to look for its extent, in the case of the circumstances. This research tries to capture not only the quantitative development of social policy under Lee Myung-bak government but also its qualitative diversion. For interpretation of the quantitative development of social policy, the research analyzes the developmental trend of social expenditure. For qualitative aspects of the development of social policy, the article examines the case studies of response policies for low fertility and financial crisis. According to the findings, the trend of the welfare expansion under Lee Myung-bak government seems to be shown continuity rather than the transition. However, Lee Myung-bak government tries to attempt the changes, in terms of the method of expansion, although it was at the limited level. It is the combination of promoting the commodification of labour in the welfare system and the strengthening of market-friendly method which pursuits the reinforcement of market discipline in the social sector. The welfare expansion policy which Lee Myng-bak government persisted on can be explained by several factors. First of all, the path of welfare expansion, which initiated by Kim Dae-jung, Roh Moo-hyun government, could not be changed easily. Second, the welfare ideology of Lee Myung-bak government seems to close to new social democratism rather than neo-liberalism. Third, an attempt of privatization of the welfare system during the initial ruling period of Lee Myung-bak could not achieve its goal by the resistance of direct democracy. Fourth, with facing the serious problems of low fertility and financial crisis, the conservative government and the party has to accept the inevitability of the expansion of welfare. Fifth, Roh Moo-hyun government was running a sound governmental finances and it eventually guaranteed an essential financial security which to be maintained on the trend of welfare expansion.