The first nation-wide referendum in Taiwan, held on March 20, 2004, was much disputed regarding its legality and constitutionality. It was also considered by its opponents to be merely a campaign plot designed by the incumbent, President Chen Shui-bian, to ensure his reelection. Despite the above controversies, the author argues that the 2004 ”peace referendum,” on balance, contributed to the consolidation of Taiwan's democracy by institutionalizing uncertainties associated with attitudinal, institutional, and identity aspects of the democratic polity. As results of the controversial nature of the 2004 peace referendum and the demobilization of voters by opposition parties, the two referendum propositions were rejected. However, there were important implications of the referendum. One is that Taiwan's president was able to use the 2004 referendum to establish a viable campaign agenda against his electoral opponents; this aspect of Taiwan's referendum process is worthy of our attention. To reduce political manipulation at the elite level, the author suggests some needed revisions of the current referendum law in Taiwan.