Recent Progress in Theory of Interstellar Medium and Star Formation Shu-ichiro Inutsuka (Dept. of Physics, Nagoya Univ.) I review the recent progress in our theoretical understanding of the physics of interstellar medium and star formation process. I emphasize the importance of the studies for molecular cloud formation that clarifies the controversial scenarios of star formation and requires our understanding of multiphase dynamics of interstellar medium in galaxies. One of the highlight of star formation study is 3D resistive MHD simulation of the self-gravitational collapse of molecular cloud cores all the way down to the formation of protostars that covers more than 18 orders of magnitude in density and 7 orders of magnitude in length scale. The result of the protostellar collapse calculation shows two distinct MHD outflows emanating from two different stages of the central object (the first core and second core), which effectively solves the angular momentum problem and magnetic flux problem in star formation. Further calculations include the formation and evolution of protoplanetary disks. This "top-down" approach for star formation modelling may provide realistic initial conditions for a "hybrid scenario" of planet formation.