Abstract: Based on the analysis of deficiency of traditional definition of freeway capacity,traffic operational efficiency was introduced as the index for the freeway operation and a new definition for freeway capacity was developed based on the operational efficiency. Due to the fact that vehicle-carrying ability and efficiency are taken into account,the new defined capacity has more advantages. Combined with the traffic theory model and field data,the traditional definition of freeway capacity and the new defined capacity were compared in aspects of traffic operational efficiency and probability of traffic breakdown. It is concluded that the new defined capacity is more rational.