Campaign expenditure has been the most direct and efficient resource for candidates, since it provides the medium for the voters to know the candidates and their policy platforms. The previous literature also shows that the election result is profoundly influenced by the campaign spending. Unfortunately, there have been few related empirical studies in Taiwan prior to the passage of the Political Contribution Act. In this paper, we collect and analyze the campaign spending for the 2008 legislative election from the Control Yuan. Because of reciprocal causality between spending and the election outcome, two-stage least squares (2SLS) is adopted to capture the unbiased relationship between them. The results show that, in addition to the party nomination and the incumbency advantage, the campaign spending influences the election result in three different ways. First, regardless of whether he/she is an incumbent or a challenger, as long as the candidate spends more money, he/she may receive more votes. Second, the spending by the opponents in the same district has a negative impact on others’ votes. Third, the marginal return on the incumbent’s spending is less than that on the challenger’s. In general, the results confirm the traditional campaign expenditure theory based on Jacobson (1978)’s seminal work.