Reviewing evolution of natural resources utilization mode in different economic formations, the paper elaboratesthe meanings of knowledge economy, and points out that the cause of unsustainable development is the acute contradictionbetween the law of ecosystem and the law of economy. It also points out that the essence of sustainable development is theharmonious relation between economy and the ecosystem. Therefore, the resources allocation should be considered from theaspect of the market demand and the aspect of the supply of the ecosystem. That is to say, firstly, the scale and pace of economygrowth must be adapted to the supply capability of the ecosystem under the current technology. Secondly, based on the supplyability of the ecosystem, we should make it clear how to make limited resources allocation attains equilibrium between marketsupply and demand. The paper clarifies that in the mode of knowledge economy; we may transform the way of economy growth,form optimum economy structure, change the base of resource supply, strengthen the supply capability of ecosystem, expandthe production-possibility frontier, and finally accomplish the eco-economy coordinated development through the innovationof institution and technology. The essence of sustainable development and the sustainable characteristics of knowledgeeconomy that were discussed above determine that knowledge economy is an economy of sustainable development. Reviewing evolution of natural resources utilization mode in different economic formations, the paper elaboratesthe meanings of knowledge economy, and points out that the cause of unsustainable development is the acute contradictionbetween the law of ecosystem and the law of economy. It also points out that the essence of sustainable development is theharmonious relation between economy and the ecosystem. that, the resources allocation should be considered from theaspectpect of the market demand and the aspect of the supply of the ecosystem. That is to say, first, the scale and pace of economy must be adapted to the supply capability of the ecosystem under the current technology. Secondly, based on the supplyability of the ecosystem, we should make it clear how to make limited resources allocation attains equilibrium between marketsupply and demand. The paper clarifies that in the mode of knowledge economy; we may transform the way of economy growth, form optimum economy struct ure the change the base of resource supply, strengthen the supply capability of ecosystem, expand the production-possibility frontier, and finally accomplish the eco-economy coordinated development through the innovation of institution and technology. The essence of sustainable development and the sustainable characteristics of knowledge economy were discussed above determine that knowledge economy is an economy of sustainable development.