In this paper, the reaction mechanism of the system of thallium (III)-copper(II)-ethylenediaminete-traacetate-hydrogen peroxide-diphenylcarbazide has been studied by spectrophotometric method. The experimental results show that the reaction mechanism of the system is based on the replacement of copper(II) by thallium (III) in copper-ethylenediamine-tetraacetate complex and the copper(II) catalyzed oxidation of diphenylcarbazide by hydrogen peroxide to form diphenylcarbazone and the color reaction of copper(II) with diphenylcarbazone in weak acidic medium at pH 5.5. The complex of copper(II)-diphenylcarbazone has an absorption maximum in organic phase at 550 nm. The optimal condition of the experimental system has been discussed.