Starting with the debate on Taiwanese national consciousness between Chen Yingzhen and Japanese scholar Shozo Fujii, and Chen’s supporter Masayoshi Matsunaga around 2004, the paper examines the historiography of Taiwanese literature studies since postwar Japan. It is argued that Shozo Fujii’s study of Taiwanese literature during the Japanese occupation period is different from Yoshinori Kobayashi’s On Taiwan, which deliberately seeks to erase the sin of colonial rule. However, in applying Western theories mechanically it is indeed easy to end up on the opposite side of historical criticism, for the reason Shozo Fujii did not provide a necessary alert to the crux in Anderson’s theory. The argumentation among the three parties not only involves how to understand Taiwanese history and literature in the complex structure of East Asia, but more importantly about how to make value judgments regarding two hundred years of colonialism.