The Taiwan Strait crisis of 1996 was the greatest challenge to Sino‐American relations in several decades. This study examines the crisis and its implications for US security policy. It outlines US policy toward the defense of Taiwan, discusses the US response to Beijing's military intimidation of Taiwan and analyzes several of the major lessons gleaned from the crisis. The paper suggests that, while China's aggressive behavior should not lead to a dramatic shift in the American position toward Taiwan's defense, some modest adjustments in policy may be warranted.