This paper examines the overconfidence of institutional investors in Taiwan's stock market. We use the return and volume data of institutional investors during 2001/01-2010/09 to examine the overconfident behavior. First, we find that the overconfident behaviors of foreign investors are significant, but the overconfident behaviors of dealers and mutual fund investors are not significant. Second, we found that the foreign investors tend to be overconfident only in bull market when examining the overconfident behavior of institutional investors in bull and bear markets. Third, we examine the overconfident behavior of institutional investors before and after financial crisis. The result shows that the overconfidence of institutional investors does not exist after the financial shock. Fourth, we test the causality of return and volume across the institutional investors. The causality relationships are found to be more significant in bear market and after crisis. Based on the above findings, we may conclude that not all institutional investors are rational and their behaviors of investment could be affected by market business cycle and financial shock. The cross effect also exists among institutional investors' behaviors.