The authors briefly trace the history of drug policy since Hong Kong became a colony of Britain in the 19th century, followed by a review of the major drug issues that have emerged in the past several decades. Drug policy in Hong Kong has passed through three stages, from "Government Opium Monopoly" (1841- 1945) to "The Prohibition Era" (1946-1960), to "Enlightened Prohibition" (1961-1995). The evolution in drug policy is analyzed in the context of both domestic and international social, economic, and political forces that affect Hong Kong. The major drug issue in the past two decades has been the trend in increasing levels of drug use among youth and the increasing popularity of psychoactive drugs among young drug users. The authors argue that these trends may be related to rapid social change that has resulted from industrialization and socioeconomic growth since the 1960's, as well as the presence of conditions favorable to the demand and supply of psychoactive drugs. Major challenges to future drug policy in Hong Kong are discussed in the final section of the paper. 6 notes and 78 references