As a developmental state, Taiwan had a unique institutional system managing industrial land development, which brought rapid economic growth before 1990. But the system gradually initiated conflicts and slowed down industrial development speed, which moved into a period when industrial, environmental and social sectors distrusted and impeded each other. Taiwan’s government commenced with an institutional transformation and adjusted central government’s position to improve sustainability. A new spatial planning structure was built as a departmental negotiation platform in 2016; and the economic authority raised its policy document ‘Industrial Land Policy White Papers’ in correspondence to bridge the connections vertically and horizontally. This article analyzes the development of Taiwan’s industrial land use policy after the 1960s and argues that the policy has been affected as the change of society. The research therefore concludes three stages during the period from the perspective of historical institutionalism, and argues the current stage which resulted from the introduction of National Spatial Plan may lead to a more sustainable industrial use policy. The departmental policy document, Industrial Land Policy White Paper, constructs the new power structure which reveals the institutional legacy of departmental state strategy. Meanwhile, as a forerunner, Taiwan’s experience could provide an example for younger developmental states in easing the conflicts in democratization and industrial development.