The Coastal Range in eastern Taiwan was originated from an oblique collision between the Luzon volcanic arc and Asian continent since the late Neogene. In this collision terrane, two intra‐arc basins, the Pliocene Chingpu and Pleistocene Chengkung basins, were developed on the eastern part of the Neogene Chimei and Chengkuangao volcanic islands, respectively, prior to their accretion to eastern Taiwan. The tectonic evolution of these Neogene volcanic islands and associated intra‐arc basins is reconstructed by stratigraphic and sedimentological analysis, igneous rock geochemistry, and comparison with observations in modern collision zone in the regions off southeastern Taiwan. In the Coastal Range, the intra‐arc basin sequences are 1.5–10 km wide and 40 km long, comparable in size to their modern analogues in the active collision zone. The basin axis trends subparallel to the volcanic ridge. In both basins, deepwater flysch overlies shallow marine reef carbonates, which in turn rest on volcanic basement, indicating rapid arc collapse (minimum rate of 1 km/m.y.) soon after the arc‐continent collision. The arc collapse occurred earlier in the north (Chimei, between 5.1 and 3.5 Ma) and later in the south (Chengkuangao, between 2.9 and 1.8 Ma), in concert with a southward propagation of the oblique collision. Sedimentation ended about 2 Ma and 1 Ma in the Chingpu and Chengkung basins, respectively, coeval with rotation of the Neogene volcanic islands. This suggests that the rotation inverted the intra‐arc basin into thrusting, uplifting, and final emergence. Thus the duration of sedimentation for the intra‐arc basins spanned only about 0.8–3.1 m.y. On the basis of land geology, offshore observations, and a clay model experiment simulating oblique arc‐continent collision, a model for the intra‐arc basin evolution in eastern Taiwan is proposed. During the collision, strike‐slip faults would have been developed in the eastern part of volcanic islands to induce transtension movements, thus forming pull‐apart, intra‐arc basins on the collapsed volcanic island. This mechanism is believed to be responsible for the formation of the Pliocene Chingpu and Pleistocene Chengkung basins as well as the present‐day offshore intra‐arc basins found on the Lutao and Lanhsu volcanic islands. The two intra‐arc basins on Lutao and Lanhsu are predicted to be short lived. As collision continues, these two basins, together with their underlying northern part of the Luzon arc, will be rotated, thrust, and uplifted in the next 1 m.y. and, finally, will become part of the southern