Shifen Sky Lantern Square is located in front of Shifen Tourist Center. It is a place used as parking lot during the day; however this place will turn into a popular spot for holding the Sky Lantern Festival during the fifteenth day of the first month in the lunar calendar every year. On this day, you will see over 100,000 sky lanterns rising into night sky during the events; it will be a magical and breathtaking sight that you will cherish forever.

Sky lantern” was invented during the Three Kingdoms period (AD 220-265) by Zhuge Liang aka Kongming. In the beginning, the sky lantern was created to use for transmit military information. In 19th century the Lantern Festival tradition has brought to Taiwan, and ever since then starting from the spring of planting season, people would release “sky lanterns” into the air with their prayers for the coming year. The American Discovery Channel TV Program ranked "The Fantastic Festivals of the World" has highlighted the Taiwan Lantern Festival as one of the best festivals in the world. The sky lanterns are constructed from oiled rice paper on a bamboo made frame, and contain a small candle or fuel cell composed of a waxy flammable material. After lit, the flame heats the air inside the lantern, same concept of a hot air balloon which raises the lantern into the sky. People usually write their wishes on the sky lanterns because it is believed as the lantern fly into the sky; it is a way to pass on your wishes to gods above.