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This article examines the determinants of intra-industry trade (IIT) between Turkey and the European Union (EU-15) using a dynamic panel data approach over the period 1999-2012. The results show that there is a negative correlation between allocations of physical capital and IIT. They also indicate that IIT takes place more frequently among countries that have similar factor endowments. The effect of distance on bilateral trade was predicted and the results confirm the assumption that trade increases if transport costs decline, thus pointing to the importance of neighboring partners. Our results also confirm the positive correlation between foreign direct investment and IIT. JEL Classification: F14, C33