Because of the folding landscape, and faulting and eroding effects on the neighboring areas of Sun Moon Lake, this area boasts of many mountains and hills. Within this area, there are 13 different-sized basins, steep slopes, and collapsed areas. The basins belong to the Puli Basin Group, a major basin-distribution area, and of these, the Yuchih Basin has the largest surface area (21 square kilometers). Sun Moon Lake (5.4 square kilometers) is the only basin that stores water. The mountains around the Yuchih Basin, including Guokeng Mountain (1,331 meters), Dajian Mountain (2,016 meters), Shueishe Mountain (2,120 meters) etc. belong to the Puli Slate Mountain Region at the converging area of the Nangang River (a fork of the Wu River). The Toushe Basin (1.6 square kilometers) and Chongguei Basin (0.7 square kilometers) are the drainage basins of Jhuoshuei River.

Originally, Sun Moon Lake, Toushe, Yuchih, and Puli were all lakes, but because this region is a sunken region of tertiary clay slate strata, and a fault region of clay slate strata, due to changes in the earth's crust involving folding and sinking, different-sized basins were formed. Those newly formed basins stored water and became lakes again. After a period of time, those lakes dried, and became fertile basins and plains. As for Sun Moon Lake, it is at a higher elevation, experiencing less erosion from rivers. No external grit comes in and the quantity of water flowing in is larger than the quantity flowing out, so it retains its lake waters.