METU-ISTEC project aims to re-structure IST RTD research in the leading public technical university of Turkey in particular, and in the following FP6 IST RTD strategic objective areas: e-Business and e-Government, Semantic-based Knowledge Systems, Cognitive Systems and Open development platforms for software and services, and Embedded Systems in Turkey, in general. This restructuring will create an opportunity to combine applied and generic technology research and will help focus on the applied research areas which are European priority. For this purpose, METU-ISTEC project is mobilizing very significant amount of resources including many academicians (20 professors) as well as very many graduate students (39 PhD students and 32 MS students). METU-ISTEC will disseminate the results obtained to much wider audiences through workshops and conferences and will diffuse and exploit project results stimulating the community. The project has laid out plans to achieve networking with EU counterpart institutes. The actions planned to achieve this objective are study visits and visiting fellows to facilitate communication and collaboration between METU and other centers having compatible scientific interests.