The monopoly business in Taiwan was started during the time of the Japanese occupation. The Taiwan Governor’s Office expanded its range of items and in 1901 established the “Monopoly Bureau of the Taiwan Governor’s Office”. Then in 1905 and 1922 the Taiwan Governor’s Office took over tobacco and liquor business. Therefore the monopolized goods before the retrocession of Taiwan were: cigarettes, liquor, opium, salt, camphor, matches, petroleum and the standardization of weights and measures.

After the retrocession of Taiwan in 1945, the Taiwan Government Executive Administration Office continued the monopoly system by establishing the "Taiwan Provincial Monopoly Bureau". In 1947 the Taiwan Provincial Government brought the Bureau directly under its authority by a re-organization which formed the “Taiwan Tobacco and Wine Bureau”. At this time, the number of monopolized items was reduced to three: tobacco, liquor and camphor. In 1951 the Bureau was put under the supervision of the Finance Department of the Taiwan Provincial Government. In1968 after the ending of camphor monopoly, the monopoly range of the Taiwan Tobacco and Wine Monopoly Bureau was reduced to only tobacco and liquor.

The Taiwan Tobacco and Wine Monopoly Bureau was an agency which handled the production, delivery, and sales of tobacco and liquor products. It was responsible for mass production of sufficient supplies of tobacco and liquor to satisfy the public demand, and also the implementation of the tobacco and liquor Monopoly Regulations. The agencies under its jurisdiction included tobacco and liquor distribution units and permitted retailers spread throughout Taiwan, which became a strong, extensive sales network. The monopoly profits from tobacco and liquor sales were submitted to the national Treasury, and fulfilled their economic and financial goals. The operations of the Bureau were very profitable, and the profits provided to the Treasury accounted for a large portion of the tax revenue of Taiwan.

The Taiwan Tobacco and Wine Monopoly Bureau was reformed since July 1, 1999 and under the Ministry of Finance continued the management of production and sales of tobacco and liquor. In preparation for internationalization and liberalization, the government intended to abolish the monopoly system and free tobacco and liquor production. Accordingly, the “Tobacco and Liquor Management Law” and the “Tobacco and Liquor Tax Law” were enacted. The two laws took effect on January 1, 2002. Since then the monopoly system was eliminated and the free production of tobacco and liquor began.

The " Taiwan Tobacco and Liquor Corporation Regulations " were passed by the Legislative Yuan on April 25, 2002 and became law by presidential decree on May 15, 2002. The name of the Bureau was subsequently changed to the Taiwan Tobacco and Liquor Corporation on July 1, 2002.