The new economy not only poses challenges, but also offers opportunities for both private and public sectors alike. To meet the challenges and take the opportunities, government must take active initiatives to adopt new management tools, techniques and philosophies of the private sector and adapt to its circumstance. Knowledge management (KM) is such an area that needs to be further explored and exploited for its full benefits to be reaped. Key issues, challenges, and opportunities of KM in the public sector need to be addressed and better understood.