Following the trend of thought of “Chinese Learning as Substance, Western Learning for Function” and “Westernization”, modern China attempted to explore the way out for Chinese society with this essense-function theory. Liang Shu-ming denied the “Westernization” theory by adopting “Willing Theory” cultural philosophy, but repeated the defect of the split between the substance and function. Then along Liang Shu-ming’s direction, Xiong Shi-li made great improvements through his “original mind” ontological philosophy, and constructed a “Chinese substance and new function” theory model of the fusion of Chinese and western cultures on the base of the unity of the substance and function, which completed the dialectical comprehensive task on Chinese and western cultural fusion thoughts in modern China. A comprehensive review of the ideological development process from Liang Shu-ming to Xiong Shi-li is of great significance to the in-depth understanding of the development law of modern Chinese and Western cultural fusion ideas and to promote the fusion of innovation and healthy development of contemporary China and the world’s multiculturalism.