The purpose of this study is to investigate how the Neolithic Wansan people in the Yilan Plain in NE Taiwan interacted with their environment from ca. 2070 to 540 BCE. As an island prone to natural disaster, Taiwanese scholars tend to attribute the abandonment of prehistoric settlements to the influence of climate change and overlook the contribution of human activity to environmental change. This research investigates the temporal-spatial variation of the intra-site scale archaeological material excavated at the Neolithic Wansan site, which is located on a small isolated hill, to explore the complexity of how humans interacted with their surroundings on a daily basis. It applies Bayesian modelling to a set of radiocarbon dates to construct a refined chronology for the prehistoric human habitation. Based on the analysis of stratigraphy, radiocarbon dating, and the spatial layout of archaeological features and objects, I demonstrate how the Neolithic Wansan people established the settlement by modifying the sloping terrain into several terraces, carving the bedrock to store goods and bury their deceased, and utilizing rocks from the hill to make tools and assemble coffins, hearths, and other alignments needed for daily life. However, these activities potentially worsened the already fragile sloped environment of this small hill. Together with the rainy climate, the long-term exploitation of this fragile and sloping terrain probably forced the Wansan people to invest time and energy in sustaining their environment. Growing requirements for maintaining the hill environment may have eventually motivated the Neolithic inhabitants to leave their settlement by 540 BCE. Although well-dated paleoenvironmental records from suitable archives covering the Neolithic period for the study region are still scarce, there is initial evidence that continuously increasing winter monsoon precipitation may have further enhanced human-driven erosional processes on the hill. The research thus demonstrates that together with paleoclimate reconstructions, study of archaeological sites can provide us with a more nuanced and direct understanding of the relationship between humans and their environment.