$^{123}I$, which is applied for the thyroid and other in vivo kinetic study, has a special role in life sciences. The 159 KeV $gamma-ray$ from $^{123}I$ is almost ideally appropriate for the current imaging instrumentation. Its decay mode (electron capture) and short half-life (13.3 hr) reduced the burden of radiation dose to the patients, and its chemical property makes it easy to synthesize the labelling compounds. In this experiment, the production of $^{123}I$ via the nuclear reaction $^{124}Te(p,2n)^{123}I$ with 28 MeV protons was sutdied. $TeO_2$ is used as a target material, because it has good physical properties. The target was prepared with $TeO_2$ powder and was molten into a ellipsoidal cavity (a=14 mm, b=10 mm, $270.8mg/cm^2$ thick) of pure platinum. The irradiation was carried out in the external proton beam with incident energies range from 28 MeV to 22 MeV, and current was $30{mu}A$. The loss of $TeO_2$ target was significantly reduced by using $4pi-cooling$ system in irradiation. The dry distillation method was adopted for the separation of $^{123}I$ from irradiated target, and when it was kept 5 minutes at $780^{circ}C$, its result was quantitative. The loss of the target material $(TeO_2)$ was below 0.2% for each production run and $^{123}I$ from the dry distillation apparatus was captured with 0.01 N NaOH in $Na^{123}I$ form, then the pH of the solution was adjusted to $7.5sim9.0$ with HC1/NaOH. The $Na^{123}I$ solution was passed through $0.2{mu}m$ membrane filter, and sterilized under high pressure and temperature for 30 minutes. The production of $^{123}I$ is acceptable for clinical application based on the quality of USP XXI.