During 2004, the rate of occupancy in Hong Kong’s male penal institutions was 114 percent, a 4 percent increase over the 2003 occupancy rate. The occupancy rate of female penal institutions skyrocketed during 2004 to reach 159 percent, although the professionalism and hard work of staff meant that the overcrowding produced no major problems. Overcrowded conditions spurred the Correctional Services to consider alternative arrangements for housing offenders, including the possibility of redeveloping the Lo Wu Correctional Institution to relieve overcrowding as well as the problem of insufficient facilities. Staff members totaled 6,652 and recruitment efforts were underway during 2004 to fill specific demands. Community partnerships took priority in 2004, with the initiation of a number of major programs involving community partners, such as the “One company one job” campaign, which focused on providing job opportunities for rehabilitated offenders. Indeed, a large focus on 2004 activities was on providing excellent custodial and rehabilitative services for inmates in order to improve their chances after release. Additionally, the employment of inmates within Correctional Services Industries is considered central to the rehabilitation and secure custody of offenders. Other programs undertaken in 2004 to cater to the needs of rehabilitated offenders included the certificate course on “Forklift Truck” operation and the “Enhanced Reintegration Programme” for young adult offenders. These efforts paid off in the 48.2 percent recidivism rate, which was the lowest in recent years. The operations and institutional management of Hong Kong’s penal institutions are described followed by a review of the rehabilitation services. Human resource management and quality assurance within the Correctional Services are discussed and the administration structure is explained. Finally, the environmental polices of Hong Kong’s Correctional Services are considered and include the use of solar energy and green housekeeping measures. Exhibits, appendixes