In order to improve QOL in patients with craniopharyngioma, retrospective analysis was performed to discover factors for influencing functional outcome and the best treatment strategy. 56 patients were treated between 1978 and 2005. They were initially treated with surgery and surgical cure was obtained in 29 patients (Group A). Subtotal tumor resection with prophylactic radiation was performed in 8 patients (Group D). Tumor recurrence was noted in 19 patients and stereotactic radiation or 2nd operation was performed in 11 patients (Group B). 2nd operation and fractionated radiation were undertaken in 8 patients (Group C). Endocrine, vision and recognition were scored from 2 to 0, respectively; 2 indicates normal, 1 partially disturbed, 0 fully disturbed. The mean score before treatment was 4.7 and the final score was 3.9. Factors leading to poor outcome included extrasellar origin, solid tumor, bad score before treatment, 2nd surgery for recurrence. The change of scores after the treatment was -0.1 in group A, -0.7 in Group B, -0.9 in Group C and 0.3 in Group D. Maximum tumor removal should be attempted with functional preservation. Subtotal removal with prophylactic radiation is recommended if the patient has normal hypothalamic function.