Background: Low health literacy is considered a worldwide health threat. The purpose of this study is to assess the prevalence and socio-demographic covariates of low health literacy in Taiwanese adults and to investigate the relationships between health literacy and health status and health care utilization. Methods: A national survey of 1493 adults was conducted in 2008. Health literacy was measured using the Mandarin Health Literacy Scale. Health status was measured based on self-rated physical and mental health. Health care utilization was measured based on self-reported outpatient clinic visits, emergency room visits, and hospitalizations. Results: Approximately thirty percent of adults were found to have low (inadequate or marginal) health literacy. They tended to be older, have fewer years of schooling, lower household income, and reside in less populated areas. Inadequate health literacy was associated with poorer mental health (OR, 0.57; 95% CI, 0.35-0.91). No association was found between health literacy and health care utilization even after adjusting for other covariates. Conclusions: Low (inadequate and marginal) health literacy is prevalent in Taiwan. High prevalence of low health literacy is not necessarily indicative of the need for interventions. Systematic efforts to evaluate the impact of low health literacy on health outcomes in other countries would help to illuminate features of health care delivery and financing systems that may mitigate the adverse health effects of low health literacy.