How do Taiwanese officials view democracy and culture and how do they plan to utilise these two soft power resources as part of advancing the island’s international position? Based primarily on interviews conducted with state officials in Taiwan, this paper analyses Taiwan’s soft power repositioning in the regional and global soft power competition and examines its advantages and disadvantages. It discusses the institutional and geopolitical constraints Taiwan faces when trying to implement its soft power policy and addresses the internal disagreements over utilising its cultural and democratic achievements. It concludes that despite the utility of soft power in pursuing its foreign policy agenda, Taiwan faces a few major institutional and conceptual obstacles, keeping Taiwanese diplomacy in a transitional period from old thinking about culture and diplomacy while hesitantly evaluating its soft power resources.