The Lanyang Museum focuses on Toucheng's history and artifacts. If you want to learn about the history of Toucheng, this is the place to visit. It is also a beautiful building, designed in the shape of Cuestas, or slanted rocks that appear commonly along Toucheng's coastline. Before Chinese settlers came, the area around Toucheng was inhabited by the Ketagalan Aboriginal tribe, whose language is now extinct.

The name Toucheng literally means "first town" in Chinese, because it was the first settlement in Yilan, settled in the late 1700s. With the nearby Wushih and Touwei Harbors around the same time, it became the economic focal point of Yilan. However in the late 1800s and early 1900s Wushih Harbor and Touwei Harbor silted in, reducing their function.

With the advent of the Japanese built Yilan railway line in the mid-1900's, as well as constant floods and continually silting of the harbors, Toucheng quickly lost its importance economically and fell into decay.

After residents of Turtle Island were relocated to Daxi in Toucheng, Daxi Harbor was expanded and has become one of the largest fishing harbors in the area.

Due to its close proximity to Taipei, Toucheng has become a major tourist area and may be the most popular surfing location in Taiwan.