AbstractThe Taiwan Island is the product of convergence and collision between the Eurasian and the Philippine Sea plates, where the geological structure is complex, seismicity is high and deformation strong. In order to quantitatively study characteristics of crustal deformation and to understand its geodynamic mechanisms of this area, we calculated the strain rate field in and around Taiwan by using the finite element method (FEM), utilizing GPS data from 1995 to 2005 as boundary constraints in simulation. The results show that contractions are predominant in central Taiwan, while extension exists in northeast and south, respectively. The largest deformation appears on the Coast Range and the adjacent waters in eastern Taiwan. The calculated slip rates on the Longitudinal Valley Fault (LVF) are 13.81∼23.48 mm/yr, meaning part of the convergence is absorbed by LVF, thus deformation to the west of LVF decays rapidly westwards and northwestwards. Moreover, the results show that the calculated velocities and GPS vectors are in good agreement, and calculated orientations of principal stresses are consistent with in‐situ stress measurements and focal mechanism solutions, demonstrating the finite element model established in this paper is reasonable. In addition, the calculated results imply that the general framework of present‐day deformation in Taiwan results from interactions by many factors such as plate collision between the Eurasian and the Philippine Sea plates, geometry of plate boundaries, faulting and rifting, opening of the Okinawa trough and retreat of the Ryukyu trench.