The number of the elderly population in Taiwan has increased sharply during the past several decades. Nowadays, Taiwan has been considered as an aging society. Although some medical and hygiene issues of the elderly have caught great attention, other issues still need for more concerns, such as the development and management of the housing industry for the elderly. This study applied the system dynamics approach to the development of the elderly housing industry in Taiwan. We investigated the causal relation among several variables, which helps us to better understand the structure of the development of the elderly housing industry, to explain its dynamics, and to predict its trend. We found that the elderly housing industry in Taiwan is a complex and dynamic system with five level variables: (1) the number of professional nurses, (2) the quantity of the infrastructure and amenities, (3) the quality of the housing, (4) the accumulated number of housing for the elderly, and (5) the number of the elderly that are looking for housing. The development of the elderly housing industry in Taiwan is a dynamic structure, which is composed of several important loops of mutual interactions of these five level variables. Some factors in the system, as well as the shock of the exogenous environment, might affect its dynamic structure, which is worth further investigating.