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The fact that Taiwan was under the strong influence of Qing China and the Colonial Japan was often used to support a belief that Taiwan lacked discourse power in the negotiation for cultural sovereignty. Located on the edge of these powerful empires and facing the dominant cultural systems of China and Japan, and the West, which was introduced through the mediation of Japan, did Taiwan only passively receive the impact from these formidable entities during its process of modernization? To answer this question, one needs to look beyond the usual models of “center vs. periphery,” or “state vs. regional,” which often highlight the unequal relationship between the colonizer and the colonized and overlook the formulation of local identity from the perspective of those who adopt outside influences. In this paper, I propose to answer the question about the forming of Taiwan’s modern cultural identity by examining the changes of Taiwanese traditional ink painting in the transition from the late Qing to Japanese period. During this period, traditional ink painting was caught right in the middle of the conflict between Taiwan’s established Chinese cultural tradition and the Western-style civilization promoted by the Japanese authority. Through a careful analysis of the ways in which Taiwanese artists of traditional ink painting negotiated the complex cultural transformation which included elements from China, Taiwan, Japan and the West, this paper offers a contextual understanding about the transformational process in which a modern cultural identity for Taiwan evolved.