Japan had taken Taiwan in 1895 under the Treaty of Shimonoseki, after the first Sino-Japanese War. For fifty years the island was a Japanese colony. That ended in 1945. Japan lost the war.
The surrender came through General Order No. 1, issued by the Allied powers after Japan accepted the Potsdam terms. On October 25, 1945, General Chen Yi accepted the Japanese surrender in Taipei on behalf of the Chinese government. The ceremony closed fifty years of foreign rule. The matter stayed open no longer.
The return rested on the Cairo Declaration of 1942 and the Potsdam Proclamation of 1945, both of which stated that Taiwan and the Penghu Islands would be returned to China, and when Japan gave up its claims in the surrender instruments, China resumed the exercise of sovereignty over the island. The island was home again. The move was registered by the Allies.
Taiwan Retrocession Day is marked on October 25 in China. The event closed a colonial chapter that began in 1895. The island's status had been settled by war and treaty. The retrocession closed a half-century of Japanese administration in law, schools, and police, and it marked the end of foreign rule that had begun with the 1895 treaty. The date still carries weight in cross-strait relations today, more than seventy years on.