Located in the key junction between mainland China and Island Southeast Asia, Taiwan is of great significance for our understanding of the southeastward dispersal of rice agriculture in the prehistoric period. Until now, quite limited archaeobotanical work has been done in this region. In eastern Taiwan, no archaeological evidence of rice agriculture has been obtained, probably owing to the poor preservation conditions for plant macroremains. Here, we report a new discovery of 4200-year-old domesticated rice remains at the Chaolaiqiao site, which for the first time in detail demonstrates the ancient practice of rice agriculture in this area. Based on a combination of factors that include a rice-based plant subsistence strategy, the mid-Holocene limits to available farmland and the fast-growing Taiwan Neolithic population from settlement pattern data, we infer that this contradiction in eastern Taiwan between land-dependent agriculture and limited suitable farmland encouraged a population movement out of Taiwan during the Middle Neolithic period.