This study explores the contradictions and challenges in the development of multiculturalism in cultural policy in Taiwan. The approach used involves an exposition and critique of the two dominant models of multiculturalism in Western theory–namely, liberal multiculturalism and postmodern multiculturalism. From the perspective of liberal multiculturalism, I argue that ignorance of multicultural citizenship limits the scope and impact of multicultural policy. I then go on to suggest that postmodern multiculturalism addresses problems related to the visibility of cultural differences and shifting identities. Through analysing the various contradictions and challenges inherent in these two approaches, this study hopes to identify appropriate forms of multiculturalism capable of taking into account both multicultural citizenship and the dynamics of cultural diversity.