This paper aims to sort out the history regarding the status of the colonialists in the Japanese literary circle in Taiwan from 1895 to 1930, and the process of the formation and development of Japanese modern literature. In addition to reviewing the activities of literary groups at that time, this paper also examines the internal transitions of the literature and literary circles from the late 19th to the early 20th centuries, namely, the writing styles, content, and writers' social roles; moreover, explores the changes of generalized literature towards narrow-sense literature and the social status of language arts. The relationship between these changes and the modern Japanese national system, and the introduction of colonial system are analyzed as well. Based on these aspects, this paper tracks and explores the history of modern literature of Japanese in Taiwan.