Born in Kōbe, Hyōgo Prefecture, Japan, to a Taiwanese father and an American mother, Hsiao grew up in Tainan, Taiwan, before moving to the United States, where she graduated from Oberlin College and earned a master's degree in political science from Columbia University.

[3][10][11] Hsiao stayed at Columbia to pursue a doctorate in political science and was recruited to establish an office for the DPP in Washington, D.C.[12] She ultimately left the university's Ph.D. program in order to return to Taiwan during its 1996 presidential election.

[10] After Chen Shui-bian took office as the President of the Republic of China in 2000, Hsiao served as his interpreter and advisor for nearly two years.

[14][1] In January 2001, Hsiao announced her intention to run for the Legislative Yuan on the DPP ticket as a supplementary member representing overseas constituencies, citing her experience in international relations.

[19] In May 2005, Hsiao represented the DPP at the annual congress of Liberal International in Sofia, Bulgaria, during which she was elected a vice-president of the organization.

Hsiao alleged that she and other DPP representatives were followed throughout their visit to Bulgaria by two unidentified persons sent by the People's Republic of China embassy in Sofia.

[29] From 2010, Hsiao spent a decade representing the DPP in Hualien County, a strongly pro-Kuomintang conservative region.

In the same year, she lost with a slim minority in a by-election, but was still regarded as having broken the "iron vote" of the Kuomintang.

In 2018, an unsuccessful recall campaign was organized against Hsiao because of her strong support for same-sex marriage legalization.

The blacklist bans them from entering mainland China and the Special Administrative Regions of Hong Kong and Macau, and restricts them from working with Chinese officials.

Chinese state-run tabloid Global Times labelled Hsiao and the six officials as "diehard secessionists".

In March 2024, she made a personal visit to the United States, her first foreign travel since being elected as the vice president.

"[41][42] During her visit to the Czech Republic, a car belonging to a diplomat from the military section of the PRC embassy in Prague was stopped by authorities after running a red light while apparently tailing Hsiao's convoy.

In response, Taiwan's Mainland Affairs Council criticized the move as hindering positive exchanges between the two sides.

[48] During her political career, Hsiao and fellow legislators Cheng Li-chun and Chiu Yi-ying gained the nickname "the S.H.E of the DPP.