In the 1990s following the end of the Cold War, the Taiwan issue regained its prominence in Sino-American relations due to adjustments made by the United States in its Taiwan policy as well as political changes taken place in Taiwan. At the beginning of the 21st century, Sino-American relations underwent severe test by the tension across the Taiwan Strait. However, with the policy adjustments of the United States and China, the political reshuffle in Taiwan, as well as the intercations among the United States, the mainland of China, and Taiwan, the situation across the Strait is moving toward stabilization. This paper analyzes the process of these adjustments and the new pattern of interactions in Sino-American relations. It also tries to shed some light on the trends in American's Taiwan policy.