Taiwan (including the Pescadores) was first populated by Austronesian peoples. Evidence of human settlement in Taiwan dates back thirty thousand years, although the first inhabitants of Taiwan may have been genetically distinct from any groups currently on the island. About four thousand years ago, ancestors of current Taiwanese aborigines settled in Taiwan. These aborigines are genetically related to Malay and Polynesians, and linguists classify their language as Austronesian.

Han Chinese began settling in the Pescadores in the 1200s, but Taiwan's hostile tribes and its lack of the trade resources valued in that era rendered it unattractive to all but "occasional adventurers or fishermen engaging in barter" until the sixteenth century.

It has been claimed but not verified that the Ming Dynasty admiral Cheng Ho (Zheng He) visited Taiwan between 1403 and 1424.

In 1544, a Portuguese ship sighted the main island of Taiwan and dubbed it "Ilha Formosa", which means "Beautiful Island." The Portuguese made no attempt to colonize Taiwan. They were content with their trading posts in Kyushu, Japan.

In 1624, the Dutch East Indies Company, headquartered in Batavia, Java, established the first European-style government ever on the soil of Taiwan, and inaugurated the modern political history of Taiwan. They did not just collect taxes, but also tried to convert the native Formosans, who enjoyed a friendly relationship with the Dutch, and learned the Dutch language. Some aborigines still retain their Dutch Bibles even today.

The Spanish later settled in the northern part of Taiwan for seventeen years, but were driven out by the Dutch. Today the only visible Spanish legacy is the reddish, solid-looking San Domingo Castle, (dubbed the "Red-Hair Castle" by Taiwanese).

The Dutch even set up orphanages on Taiwan at that time. Today, their visible legacy in Taiwan is limited to a castle in Anping District of Tainan City. It was the Dutch who started importing Chinese workers from China's Fujian province as laborers. The Dutch had its colonial capital at Tayoan City. The Dutch military presence concentrated at a fort called Castle Zeelandia. The Dutch colonialists also used the aborigines to hunt the native Formosan Sika deer that inhabited Taiwan.

Naval and troop forces of Southern Fujian defeated the Dutch in 1662, subsequently expelling the Dutch government and military from the island. Following the fall of the Ming dynasty, Koxinga retreated to Taiwan as a self-styled Ming loyalist and established the Kingdom of Tungning (1662?1683). Koxinga established his capital at Tainan and he and his heirs, Zheng Jing who ruled from 1662-82 and his son Zheng Keshuang , who served less than a year, continued to launch raids on the south-east coast of mainland China well into the Qing dynasty in an attempt to recover the mainland. Koxinga's attempt to solicit support from the Japanese Shogun was unsuccessful

In 1683, following the defeat of Koxinga's grandson by an armada led by Admiral Shi Lang of Southern Fujian,the Qing Dynasty formally annexed Taiwan, placing it under the jurisdiction of Fujian province. Migrants mostly of Southern Fujian continued to enter Taiwan. The bulk of Taiwan's population today claim descent from these migrants. During this time, there were a number of conflicts involving Chinese from different regions of Southern Fujian, and between Southern Fujian Chinese and aborigines.

The Qing Dynasty was forced to cede the island to Japan in 1895 after the 1st Sino-Japanese War. Inhabitants of Taiwan wishing to remain Chinese subjects were given a two-year grace period to sell their property and return to China. Very few Taiwanese took the offer.

The Japanese continued to rule until the second world war.Then Taiwan was returned to the Republic of China (ROC) in 1945 after Japanese defeat in the 2nd World War. In 1949, after losing the Chinese mainland as a result of the Chinese civil war, the ROC government under the Kuomintang (KMT) withdrew to Taipei, which has been the seat of the government of the ROC ever since.