The man named Zhang Xiangzhong has been identified by local media and a human rights group as the same person who was part of a movement calling for Chinese government officials to disclose their assets.
Zhang arrived in Taiwan on April 12 but separated from his tour group the next day.
He sought help on Monday from the Taiwan Association for Human Rights in applying for political asylum.
Taiwan's immigration department said Tuesday it had located Zhang and was providing him with temporary accommodation while authorities investigate his case.
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"We have to clarify details of his case to make further judgement and conclusions," said Chiu Chui-cheng of the Mainland Affairs Council, Taiwan's top policymaking body on China.
"He would need to provide sufficient proof, including his involvement with democratic movements and that his life may be endangered if deported back to China," Chiu, the council's vice-chairman, told AFP.
Chui said mainland Chinese could not be granted political asylum but the government would evaluate whether he qualifies for a "long-term stay" permit.
Zhang said he was motivated to leave the mainland by the wife of detained Taiwanese rights activist Lee Ming-cheh, according to a Radio Free Asia interview.
In a case that has drawn international scrutiny, Lee Ching-yu pledged she would "rescue" her husband, who is under investigation in mainland China for suspected activities "endangering national security.