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The Shanchiao fault, located to the west of the Taipei Basin in northern Taiwan, is a highly active normal fault that has a left-slip component and fault length of over 40 km. We suggest that the Shanchiao fault still has the ability to induce coseismic subsidence in the Taipei Basin under present extensional regime of northern Taiwan. In order to characterize the coseismic ground deformation and assess the potential inundation hazards in Taipei Basin, we estimate surface displacements using elastic dislocation models. The largest slip is assumed to be located underneath the Kuandu area due to the observation of deepest Tertiary basement in this area. Based on the topography changes due to coseismic deformation in a potential magnitude 7 event induced by reactivation of the Shanchiao fault, a 2D inundation model was adopted to simulate several inundation scenarios, including potential flood inundation below high tide condition and under various return-period design rainfall events. The predicted inundation maps based on various return-period flood events can provide information to assess potential earthquake-induced inundation hazards.