Compared to the western or northern coastal areas in Taiwan, the development of Shueili is quite late. Shueili Township used to be subordinate to Shueishalian Fanjie. In 1877, Taiwan Prefecture Puli Fort was set up. In 1887, Shueili was made subordinate to Taichung County Jiji Administration Office Jiji Fort. In 1888, it was made subordinate to Taichung County Nantou Administration Office Jiji Fort. In 1888, it was made subordinate Nantou Hall Jiji Branch Hall Jiji Fort. And in the final years under the Japanese rule, it was made subordinate to Taichung State Singao Prefecture Jiji Village. In 1945, it was made subordinate to Taichung County Singao District Jiji Township. In January 1950, ten villages, including Shezih, Bashepu, Jyunkeng were zoned from Jiji Township and Shueili Township was set up. In October of the same year, the area was named Shueili Township, Nantou County. 

　　Shueili area used to be inhabited by Taiwan’s aborigine tribes. In 1867, a Han man Chen Shih-chuan came to Shuelie for hunting and got permitted by the aborigines to settle in Shueishalian Fanjie (now known as Dingkan Village) and engage in agricultural activities. It was the very first Han man who settled in Shueili Township. During the Japanese colonial period, people from Hsinchu once came to Shueili to investigate the potential for the development of camphor business. Since the area was ideal for plantation, a lot of locals living in plain areas began to engage in camphor business, which resulted in an increase of Han population in Shueili. During that time, Shueili was the center of lumber business for it had thick forests. Even till now, many historic lumber factories are preserved as historic sites, such as Checheng Jhen Chang Lumber Plant. Shueili (literally meaning an area with abundant water) won its name for it had cold weather and was rich in water.

　　In order to exploit the natural resources in the mountains, the Japanese colonial government constructed a road in 1908 which linked Mingjian, Shueili, Toushe, Yuchih, and Puli and built sugar plants. Taiwanese people were encouraged to cultivate sugarcanes, which resulted in an increase of non-native people and the suppression of native Taiwanese aborigines, who were then forced to relocate in Shueili and Sinyi. In 1921, a power plant was built by the Japanese around Sun Moon Lake. Ten years later in 1931, another power plant Jyugong Power Plant was built. The small township began to experience a boom and an increase in population. Shueilikeng had been subordinate to Jiji Township and was rezoned and renamed Shueili Township in 1950. In 1955, under the Executive Yuan’s rezoning plan, Yongsing and Yufong, which were subordinate to Lugu Township, were rezoned to be subordinate to Shueili Township. In 1966, Shueili was officially renamed Shueili Township.