Choices within the park are very limited and, apart from an indigenous-themed resort at Bulowan and an upmarket hotel in Tianxiang, all are pretty basic. Thus most visitors base themselves outside the park. For those taking tours, Hualien is logical. If you're driving, staying in Xincheng or Fushi Village gives an earlier start and offers easier parking. By bus, Xingcheng station and Fushi are also handy, less so Hualien Station or Qixingtan.
Xincheng & Fushi
There's a handful of widely spaced, good value, mid-market accommodation in the rural spaces around Xincheng train station, plus a fairly forgettable selection in Fushi (aka Taroko Village), a rather lifeless roadside strip 3km further northwest, just before the park entrance which also has a hostel.
Within the National Park
Tianxiang is dominated by the upmarket Silks Place Hotel, but you can also stay in the drearily institutional Tienhsiang Youth Activity Centre, or at ageing guesthouses attached to either of the settlement's two churches.
A few remote homestays are listed by the National Park HQ, including options in Dali and Datong (only accessible on foot).
If you're cycling right across Taiwan on Rte 8, there's a handy, if remote, hostel 400m off the road in tiny Guanyun (觀雲, Km117) at an altitude of over 2370.