A field survey with ship-borne acoustic Doppler current profiler was carried out across the Penghu Channel, the gate of Taiwan Strait, from 17 to 20 of May 1999. A new method of least-squares interpolation is used to separate the mean flow from tidal currents. The technique uses Gaussian interpolation functions with local support which also take into consideration the anisotropic nature of the flow structure. Optimal solution is obtained by determining the tradeoff between the misfit and the model order. The analysis indicates that the currents in the Penghu Channel are essentially barotropic and characterized by strong semidiurnal tides and mean flow. The along-channel averaged tidal velocity amplitudes are 1.2 m s-1 and 0.32 m s-1 for semidiurnal and diurnal tides, respectively. The mean current is uniform with an average northward velocity of 0.73 m s-1. The total transport is about 1.6 Sv, which represents a significant mass and material flux into the East China Sea.