Magnetic data collected form 1989 to 1994 off eastern Taiwan were analyzed for tectonic interpretation. Unlike what was previously believed, the magnetic features indicate that the northern Luzon Arc extends to the east of the Coastal Range. Accordingly, most of the Coastal Range and its southward extension (the Huatung Ridge) could be regarded as a compressed subduction complex. The northern Luzon Arc has changed in direction form NNW-SSE to NNE-SSW at the Taitung Canyon between the Lutao and Lanhsu Islands. The collision between the Luzon Arc and the Tananao Complex, which occurs north of 23.5 degree N, corresponds to a hard collision (with little or without buffered material in between) as evidenced by the intensive occurrence of earthquakes. South of 23.5 degree N, the collision between the Luzon Arc and the Tananao Complex is a soft one, buffered by the compressing subduction complex. The magnetic boundaries of the northern Luzon Arc divide the earthquakes into two main provinces, corresponding to hard collision and soft collision. North of 22.7 degree N, the Luzon Arc has been subsiding, which is probably associated with the northwestward subduction of the Philippine Sea plate beneath the northeastern Taiwan area.