Background: The implementation of worksite smoking policies has shown significant effects on reducing employees' smoking consumption and protecting non-smoking workers. However, there are no data about workplace smoking policies in Taiwan. The purpose of this study was to document the status of worksite smoking policies in Taiwan and its potential impact on employees' smoking behaviours. Methods: A two-stage investigation was conducted. The first stage was to examine the current status of workplace smoking policies and the second was to evaluate the relationship between workplace smoking policies and employees' smoking behaviours. After two follow-ups in each stage, 264 companies and 1141 employees returned their questionnaires. Results: Workplace smoking policies were associated with types of businesses and size of workplaces. Only approximately half of manufacturing and service companies have implemented a prohibitive smoking policy. Large facilities (> 750 employees) were more likely to implement a prohibitive policy (57%). Employees in workplaces with a prohibitive policy had lower prevalence of smoking and cigarette consumption, and less exposure to passive smoking. Although most smokers agreed with banning smoking in their work environment, no difference in interest in participating in cessation programs was found. Conclusions: Significant associations were found between workplace smoking policies and employees' smoking behaviours. Results of the study provide basic information for designing more refined smoking policies in the workplace in Taiwan.