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Abstract Understanding the stress state before and after an earthquake is essential to study how stress on faults evolves during the seismic cycle. This study integrates wellbore failure analysis, laboratory experiments, and edge dislocation model to study the stress state before and after the Chi‐Chi earthquake. The post‐earthquake in‐situ stress state observed along boreholes of the Taiwan Chelungpu‐fault Drilling Project (TCDP) is heterogeneous due to lithological variations. Along the borehole, we observe that drilling‐induced tensile fractures are only present in sandstones, whereas breakouts are mostly present in silt‐rich rocks. Laboratory experiments on TCDP cores also show that tensile and compressive strength are weaker in sandstones than in silt‐rich rocks. These observations imply that both maximum and minimum horizontal principal stresses are higher in silt‐rich intervals. Extended leak‐off tests in the TCDP borehole also show lower minimum horizontal stress in sand‐rich intervals, consistent with the above observations. We combine these observations to estimate a profile of stress magnitudes along the well which explains the variability of stress states found in previous studies. The stress heterogeneity we observed underlines the importance of acknowledging the spatial scale that the stress data represent. We then use an edge dislocation model constrained by GPS surface displacements obtained during Chi‐Chi earthquake to calculate the coseismic stress changes. Our inferred pre‐earthquake stress magnitudes, obtained by subtracting the coseismic stress change from the post‐earthquake stress, suggest subcritical stress state before the earthquake despite the large displacements observed during the Chi‐Chi earthquake in the region where TCDP encountered the fault.