Reservoir watersheds can store rainfall as the backup water in case of the drought. The quantity of rainfall varies significantly in different seasons. The southern area needs large reservoirs to condition the water storage resources because it rains less here. However, Tseng-Wen reservoir watershed includes state-owned lands and private ones. The state owns so many lands that it’s difficult to manage these lands. The problem is that a great number of the state-owned lands are occupied by the local people. The purpose of this study is to investigate the situation of how the state-owned lands in Tseng-Wen reservoir watershed are used and occupied. This study also analyzes the related laws and management system, value how to put into practice the land management and improve the environmental protection, and prevent the disasters from happening. The study finds that there are five reasons to explain why the state-owned lands are occupied: 1.People have started farming there before Kuomintang government came to Taiwan; 2.The authorities of the lands have changed, but the contract was not renewed;3.The contract cannot be renewed because the state-owned farming lands are used for construction illegally; 4.The contract cannot be renewed because the state-owned farming lands are not cultivated by the owners themselves; 5.People occupied the state-owned lands because of their living demands. The study concludes that to solve the problem of occupying the state-owned lands in Tseng-Wen reservoir watershed, the authorities should regulate different uses of these lands according to their zonings and levels. The authorities should prohibit the lands close to and have more effect on Tseng-Wen reservoir watershed from being occupied and used. The authorities should appropriately allow people to use the lands far away from and have less or no effect on Tseng-Wen reservoir watershed. In accord with state-owned administrative measures, the authorities can solve the problem of occupying the state-owned lands in Tseng-Wen reservoir watershed.