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The controversy regarding the political status of Taiwan hinges on whether Taiwan, including the Pescadores (Penghu), should remain effectively independent as territory of the Republic of China (ROC), become unified with the territories now governed by the People's Republic of China (PRC), or formally declare independence and become the Republic of Taiwan. The controversy over the political status of the Republic of China hinges on whether its existence as a state is legitimate and recognized.

Currently, Taiwan, Penghu, Kinmen, Matsu and some other minor islands effectively make up the jurisdiction of the state known as the Republic of China. The ROC ruled mainland China, and claimed sovereignty over Outer Mongolia and Tannu Uriankhai (part of which is present day Tuva) before losing the Chinese Civil War and relocating its government to Taipei in December 1949.

Since the ROC lost its United Nations seat in 1971 (replaced by the PRC), most sovereign states have switched their diplomatic recognition to the PRC, recognizing or acknowledging the PRC to be the sole legitimate representative of all China. As of January 2008, the ROC maintains official diplomatic relations with 23 sovereign states,^[1] although de facto relations are maintained with nearly all others. Agencies such as the Taipei Economic and Cultural Representative Office and American Institute in Taiwan operate as de facto embassies without official diplomatic status.

The ROC government has in the past actively pursued the claim as the sole legitimate government over China, as well as its former territories. This position started to be largely adjusted in the early 1990s, changing to one that does not actively challenge the legitimacy of PRC rule over mainland China. However, the ROC's claims have never been renounced.^[2] Both the PRC and the ROC carry out cross-strait relations through specialized agencies (such as the Mainland Affairs Council of the ROC), rather than through foreign ministries. Different groups have different concepts of what the current formal political situation of Taiwan is. (See also Chinese reunification, Taiwan independence, and Cross-Strait relations)

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