A trade mark is a distinctive sign or combination of signs used by merchants or business entity to identify that the products or services with which the trademark appears originate from a unique source of origin, and to distinguish its products or services from those of other entities. Considering that trade mark laws aim to protect the functions of a trade mark, rather that the trade mark as such, it is important to understand the functions of trade mark in discussing the rationale of trade mark protection. In this article, the author examines the functions of a trade mark and limit of its protection from the perspective of the dilution theory, as issues concerning the adoption dilution theory leads to discussions on the fundamental rationale of trade mark protection. The essential function of a trademark is to exclusively identify the commercial source or origin of products or services. Traditionally, trade mark rights generally arise out of the use of the sign in relation to certain products or services. A trade mark also assures quality of the product as a symbol representing the goodwill of the business. By identifying the commercial source of products and services, trade marks facilitate identification of products and services which meet the expectations of consumers as to quality and other characteristics. A trade mark also advertises the product and creates an image in the mind of the ultimate purchaser. In the modern commercial transactions, this advertising function has become significant and increases the value of a trade mark as commercial magnet. Trade mark law has been generally focused on the need for consumer protection. Consequently, trademark law traditionally concerned itself with situations where an unauthorized party sold products that are directly competing with or at least related to those sold by the trade mark owner. This leads to the likelihood of confusion theory as a theoretical basis in finding an infringement of trade mark. However, a trade mark is diluted when the use of similar or identical trade marks in other non-competing products and this means that the trademark in and of itself will lose its distinctive value as a commercial magnet. Trade mark dilution is a theory permitting the owner of a famous trademark to forbid others from using that mark in a way that would lessen its uniqueness. The types of dilution include two related concepts: blurring and tarnishment. The dilution theory was proposed by Frank Schechter in his article in 1927. Since then, the dilution theory was partly and reluctantly adopted by the U.S. Court and also codified in the Federal Trademark Dilution Act, which has been subsequently revised by the Trademark Dilution Revision Act of 2006. Korea also adopted the concept of dilution theory by amendment to the Unfair Competition Law. Although adoption of the dilution theory does reflect the shift of modern functions of trade marks, it should be noted that trademark law is designed to fulfill the public policy objective of consumer protection, by preventing the public from being misled as to the origin or quality of a product or service and to maintain the effective market competition regime.