This paper examines the interrelationship between the central and local governments in Taiwan, with particular reference to the period after the 1996 decision to downsize the Taiwan Provincial Government. The paper argues that in the wake of the 1996 decision, while relations between the different levels of government in Taiwan have become confused, the contemporary state of intergovernmental relations is not entirely without order In order to shed some light on the development of contemporary intergovernmental relations in Taiwan, this paper refers to three main theoretical approaches: the bounded rationality, incrementalism, and ”garbage can” models. The paper also refers to documentary analysis combined with a survey of relevant government officials. These are used to explain the contemporary pattern of relations between the different levels of Taiwan's government. In conclusion, the paper argues that leadership is the key factor shaping the patterns of interaction among different levels of government in Taiwan today.