Distance education has been undergoing incremental change over the past decade or so since the advent of the commercial Internet and the World Wide Web. At the age of information and knowledge economy, developing modern distance education with e-business model is necessary. Following a review of distance education technology past and present, this paper analyzes the application status of e-business model in distance education, proposes the models of e-business and a complete e-business system structure of distance education based on information technology, and providing suggestions for raising the level of modern distance education by means of E commerce.