On 21 September 1999 at 1:47 am, an earthquake measuring 7.3 on the Richter scale struck central Taiwan, causing serious damage and loss of lives. As of February 2006, only 70% of the reestablishment work has been completed. With rapid advances in urban development, the destruction incurred by earthquake disasters increases both in extent and severity. With the aim to minimize loss in human lives and properties caused by natural disasters, this study probes into the urban disaster prevention mechanism, examines the problems encountered in disaster prevention and strategies for prevention. A system dynamics model is established to simulate changes in the disaster prevention system on the basis of related statistics and survey data of September 21 Earthquake. Strategies for urban planning, development and management are suggested from the perspective of disaster prevention. The simulation analysis can offer valuable insight to policy-makers for assessing and deciding on the most feasible and effective strategies to be implemented.