During 1950's, KMT troops and communist troops constantly faced each other across the Taiwan Strait, those islands located in the battlefront along south-east coast, encountering the military threats from Chinese communist, might incur attack at any time by communist troops. In July of 1953, after Korea war gradually calmed down, the Chinese communists massed troops along the coasts of Zenjiang, Fujen, Kuandong, prepared to concentrate its power to deal with Taiwan issue, the Taiwan Strait was full of strange atmosphere. In January of 1955, Chinese communists captured the Ejunshan island of Dachen, thereby obtaining the geographical superiority over KMT troop, resulting in the serious threat to Dachen's security. To avoid further conflict between two troops, USA advised KMT government to abandon those islands of Dachen area, concentrating military power to defense Taiwan and Penhu areas. KMT government considered the pressures of real situation and foreign factors, determined to withdraw overall people and troop in Dachen, the troop were transferred into Kinmen and Machu to garrison the two islands, while the people was to immigrate to Taiwan, this is historically know as Dachen withdrawal. This directly examined KMT government’s administrative capability in terms of proper settlement and installment when facing over 18,000 residents of Dachen, the key study points of this article will be placed on such issues as the challenges that KMT encountered, and the perfection of associated approaches it adopted, during the process of settlement.