This paper deals with deformation textures and fabrics of mantle-derived xenoliths and dislocation microstructures of olivine in the upper mantle in the Penghu Islands, Taiwan. According to the calculation of the chemical composition of xenolith minerals (pyroxene), the equilibrium temperatures and pressures were 986-1116@ and 1.50-2.60 GPa, respectively. Deformation events in the upper mantle may fall into three sequences' (1) uniform steady-state flow deformation with high temperatures and low stresses, (2) shear flow deformation with high temperatures and relatively high stresses on diapiric margins of the upper mantle, and (3) extraction deformation of {110} glide bands with low temperatures and high strain rates. Deformation events and thermal structure of the upper mantle in the study area show that eastern Fujian and the Penghu Islands are characterized by very similar rheological properties of the upper mantle. Volcanism of basalts in the Penghu Islands is related to hot spots of the upper mantle under neath the Taiwan Strait, and diapirism and upwelling of the upper mantle are the dominant factors responsible for rifting of the continental margins in eastern China.