This paper proposes an ontology-based grid architecture model in terms of the Universal Knowledge Grid (UKG) for building large-scale distributed knowledge system on the grid. UKG emphasizes geographically distributed high-performance knowledge discovery applications and knowledge integration services. Five core components have been identified: an intelligent composer for user interface, an ontology server providing data integration ontology services, data mining ontology services, knowledge integration ontology services, a metadata directory server maintaining the metadata describing all the data, tools and knowledge, metadata database (db) stores metadata and a knowledge base as container for knowledge. An application example on Foreign Exchange Management (FEM) is also presented.