The purpose of this study is to project the supply and demand for nurses till the year 2012 and to make recommendations for establishment of proper policies regarding them. To predict the supply of nurses. a baseline projection and demographic methods were employed. The derivative demand was used to forecast the demand of nurses. The results of this study provide us with valuable information on nursing manpower planning for the 21th century. Specifically. results indicate that there will be an oversupply of nurses in the near future based on the current productivity. Based on the medical law. there will be an undersupply of nurses till 2002 but an oversupply after that. Thus. the active supply of nurses must be decreased. One way to achieve this would be decreasing the size of training and education. Thus. we recommend that the number of entrances to 4 year programs will be reduced 20% in 2004. and a reduction of 20% by 2005 in 3 year programs. The results of this study suggest the following: First. a manpower bank for nurses who are trying to reenter the market must be established. Second, improvement of education and retraining is needed for the quality control of nurses. Further studies should take into consideration the above factors.