Under the trend of financial deregulation and internationalization, the limits on foreign fund into Taiwan capital market have been lifted gradually. The impact on the stock market remains to be tapped. This study attempts to analyze the investment behavior of the foreign investment funds in Taiwan. Whether they escape soon while the external environment is getting pale; whether their investment strategy differ when the environment changes, and whether they generate superior investment performance than the average. The Asian Financial Storm in 1997 is used to distinguish the external environment into stable and unstable conditions. The investment behavior of foreign funds in Taiwan is examined for periods around it. The empirical results show that foreign funds are remitted out significantly during the Storm period. The put amount is significantly greater than buying. The stocks preferred have superior profitability and financial strength. The foreign investment funds also outperform the market.