We performed this nationwide retrospective investigation among the recipients of varicella vaccine to evaluate the breakthrough varicella infection rate, factors associated with breakthrough infection and the vaccine effectiveness. The recipients of these vaccinations were identified through Taiwan's National Immunization Information System and data on breakthrough infections among these recipients were collected by using Taiwan's National Health Insurance Claims Database. From 2000 to 2007, 1,057,345 persons received varicella vaccinations in Taiwan. Varicella breakthrough infection occurred among 22,640 (2.1%) vaccinees and 170 (0.016%) required hospitalization for varicella disease. Annual breakthrough infection rates ranged from 0.12% to 2.04%. The mean age of vaccination was 1.6 years (median 1.3 years) and the mean age at breakthrough infection was 3.9 years. The mean interval between vaccination and the breakthrough infection was 2.3 years. The rate was significantly lower in regions where free varicella vaccinations were available than in regions where they were not (P < 0.001). Varicella breakthrough infection was significantly more likely to occur at 5 and 6 years of age among the vaccinees, who received vaccination between 12 months and 23 months of age (P < 0.001). The vaccine effectiveness against varicella was 82.6% and against varicella-related hospitalization was 85.4% from 2000 to 2005.