The taxi industry was not regulated until the 1960s. In that decade and the next, a unified fare system was set in place and the individually owned taxi system started in which taxis could be operated by individual people who owned their own vehicle. By 1970, the number of taxis on the road hit 23,505 and more than doubled to 60,074 by 1980.

The 1986 Asian Games and 1988 Olympics where both hosted in Korea and served as a major turning point in taxi service. To prepare for these international events, the national government introduced a system to designate brand taxi companies for diversification, pushed for vehicles to be upgraded, and tried to increase the quality of service for passengers. The first qualification test for drivers was introduced from 1990.

Despite these positive changes, the nation was prospering which led to more people owning their own private vehicles, which cut into the market share of taxis. The government therefore introduced a salary system for drivers that later went away and lowered corporate taxes in hopes that the owners would push the savings to their drivers. The metering system also changed to reflect both distance and time.

In 1996, taxis in Seoul had a mode share of 10.4% and 225,285 taxis were on the road. By 2002, their market share shrunk to 7.4% and hit 6.5% in 2005, yet the number of vehicles grew to 248,918. In 2001, bus operators started to get financial assistance from the government and a fuel tax refund to help stabilize their business and keep that form of public transport available to the public. The gas tax refund was later extended to taxis which had been suffering from oversupply; an issue that continues to this day. There have been pushes for caps on the number of cabs, rules concerning when drivers can operate, and other methods to help the income of drivers. In 2005, the Ministry of Land, Infrastructure and Transport implemented the taxi quota system in Article 5 of the Passenger Transport Service Act (English translation of Act) to control the number of taxis. The method for calculating the quota is the present number of taxis multipled by the sum of the present service rate divided by the target service rate multiplied by the sum of the present operation rate divided by the stable operation rate. Mayors and provincial governors establish their taxi licence supply based on a survey every five years with includes the calculation of the taxi quota system. The first plan was for 2005-2009, the second for 2010-2014. If a local government decides to reduce the number of taxis in accordance with the law, the transport ministry would need to consult the finance ministry to prepare standards for financial support for drivers who would be cut. Financial limitations, concerns over who to cut, the amount of compensation, introduction of government welfare, and talks for a change to the supply and demand system have all complicated this. As of 2014, the system has not been implemented.

Some taxi drivers claim their business is a type of public transportation and therefore would be able to apply for the same subsidies that bus and subway operators receive. Due to their higher fares than public transportation modes and their lower passenger capacity, their claim has been denied.

Uber launched in Korea in 2013, but as their drivers transported people in private vehicles, an act prohibited by the Passenger Transport Service Act, the Korean branch was shut down and a number of their staff charged with suspicion of operating an illegal taxi service in 2015. In 2019, the company relaunched in Korea in partnership with International Taxis.

As Uber left the Korean market, several other companies have tried to enter. The most popular might be Kakao T, which uses licensed taxis and is used as a supplement to find passengers faster, is legal and very common. As of 2017, 80% of taxis had registered with Kakao T. A reason for its popularity is the app is connected with the most popular chat program in Korea; Kakao Talk.

In November 2017, taxi drivers pushed to get carpooling apps, such as Luxi and Poolus, banned but failed. The loophole is that the Passenger Transport Service Act does not cover passenger vehicles for commuting and commuting hours are not specified by the law. Luxi and Poolus both interpreted commuting times as 5 AM to 11 AM and 5 PM to 2 AM but Poolus made their hours more flexible in late 2017. As Poolus received 22 billion won of investments (roughly $20.5 million USD) and Luxi was acquired for 25.2 billion won (roughly $23.5 million USD) by Kakao Mobility in 2017 and 2018, respectively, it is unclear whether they will be allowed to continue to operate.

A significant amount of the information on this page was sourced from the books KSP 9 Lessons from Best Experiences from Public Transport Reform ( PDF download) and 50 Praxes for Better Transport in Korea ( PDF download) from the Korea Transport Institute.