The Indian Ocean Region (IOR) is rising in strategic importance and 21st century geopolitics is going to be centered on the Indian Ocean. In this scenario, China has launched the Belt and Road Initiative (BRI) with the China-Pakistan Economic Corridor (CPEC) as its key component and Gwadar deep-water port as its main terminus. CPEC will serve to connect the Pakistani port of Gwadar to China’s Xinjiang province. Once the deep-water port of Gwadar is fully operational, it will greatly alter the geo-strategic balance of the region. This paper argues that although CPEC is being seen as an economic model and can usher in a new global paradigm of shared interests and peaceful economic interdependence, it can also lead to a new maritime contest. In case of an atmosphere of conflict, CPEC can have wider implications deriving from policy options taken by the major powers, emerging powers and regional players in the Indian Ocean. It is, however, the strategic behavior of the United States that will determine the final outcome.