The March 31, 2002, Hualien offshore earthquake (ML6.8, Mw7.0) caused minor damage near its epicenter but significant damage in Taipei, about 110 km from the epicenter. The recorded PGA values around the Taipei basin vary in a factor of 5. The high-PGA values in the southeastern part of the basin correspond to the most significant damage area during the earthquake. Strong ground-motion recordings from this event recorded at stations around the Taipei basin exhibit several distinct large-amplitude seismic arrivals that can be interpreted as the PmP, SmP and SmS phases. The largest amplitude of the critically reflected S-wave from the Moho (SmS) and the amplification of soft shallow sediments unique for each site are responsible for the maximum peak ground motion and the significant damage in the Taipei basin during the Hualien offshore earthquake.