Title: Understanding the Effectiveness of Lipschitz-Continuity in Generative Adversarial Nets. Abstract: In this paper, we investigate the underlying factor that leads to the failure and success in training of GANs. Specifically, we study the property of the optimal discriminative function $f^*(x)$ and show that $f^*(x)$ in most GANs can only reflect the local densities at $x$, which means the value of $f^*(x)$ for points in the fake distribution ($P_g$) does not contain any information useful about the location of other points in the real distribution ($P_r$). Given that the supports of the real and fake distributions are usually disjoint, we argue that such a $f^*(x)$ and its gradient tell nothing about "how to pull $P_g$ to $P_r$", which turns out to be the fundamental cause of failure in training of GANs. We further demonstrate that a well-defined distance metric (including the dual form of Wasserstein distance with a compacted constraint) does not necessarily ensure the convergence of GANs. Finally, we propose Lipschitz-continuity condition as a general solution and show that in a large family of GAN objectives, Lipschitz condition is capable of connecting $P_g$ and $P_r$ through $f^*(x)$ such that the gradient $\nabla_{\!x}f^*(x)$ at each sample $x \sim P_g$ points towards some real sample $y \sim P_r$.