The purpose of this study is to examine the combined effect of selfefficacy and academic integration on higher education students studying IT (Information Technology) majors in Taiwan. We introduced self-efficacy, which is a psychological factor that affects students' academic outcomes, as a new factor in Tinto' theory, a well-known framework in student retention research. Academic integration is the main proposition of Tinto's theory affecting students' decision to dropout. Students from different populations have various reasons from dropping out of their studies. An examination of the relationship between self-efficacy and academic integration is useful to understand the effect of self-efficacy on academic outcomes on the IT student population in Taiwan. Data from a Taiwanese national survey database conducted in 2005 was used to achieve the research objective. A total of 2,895 records were extracted from 75,084 students in public and private institutions studying in two IT-related Majors, namely Information Management (IM) and Computer Science (CS). MANOVA was used to analyze the interaction effects between academic integration and self-efficacy. The independent variables were institution types and students' majors. The results showed that students from public institutions have higher levels of self-efficacy than students from private ones. Another finding is that IM students seem to have better study strategies and habits than CS students. However, CS students were found to have better collaboration and satisfaction with their institutions than IM students. Team projects, counselling Educ Inf Technol (2010) 15:333-353 services, and flexible teaching and learning strategy are suggested to enhance students' academic integration and self-efficacy.