On the night of the festival, children with lanterns in hand can be seen everywhere. Temples adorned with decorative lanterns of beasts, birds, flowers and historical figures highlight these glowing works of art, and lantern competitions are held island-wide. The Festival is further enriched by the lantern riddle contests held on the night. In addition, it is also celebrated by eating "Tang Yuan", an important custom symbolizing family unity.

      Though decorative lanterns have traditionally been made from bamboo, electric lanterns have become more popular over recent years. Countless different designs are used for the lanterns, generally can be divided into iconic lanterns and depictive lanterns. Iconic lanterns are modeled after animals, flowers, people, and any number of other objects; depictive lanterns depict scenes from popular stories such as the Legend of White Snake, the Cowherd and the Weaving Maiden, and the Romance of Three Kingdoms, stories teaching filial piety and other traditional values in an entertaining manner.

      In 1990, the Tourism Bureau held the first "Taipei Lantern Festival" at Chiang Kai-Shek Memorial Hall Plaza. Due to the event's overwhelming popularity, the festival has been expanded every year. It showcases each year a new theme based on the zodiac animal of the year. The main event of the festival is the Lantern Lighting Ceremony held on the first day of the display with a fusion of color, light, and sound that attracts universal applause from onlookers.

      Lantern riddles are, as the name implies, riddles stuck on the surface of lanterns for people to guess while enjoying the Lantern Festival displays. Since guessing the riddles can be as hard as shooting a tiger, it has been nicknamed as "Lantern Tigers." Lantern riddles cover a wide range of topics and come in plethora of different forms. They provide intellectual, entertaining, and interesting festival activities.