About 4,900 troops, assisted by F-16 fighter jets and Super Cobra attack helicopters, deployed near Chialutang, a coastal village in southern Taiwan, as they defended the beaches against a mock invasion.
"If war were to break out, the Chialutang beaches would be a likely landing site for Chinese forces," an army lieutenant colonel told AFP after the one-day exercise, identifying himself only by his surname Tai.
Several kilometres (miles) inland, 1,200 infantrymen simulated defence against an enemy force dropped by air in support of the beach invasion.
Meanwhile, in Huko township in the north of the island, 400 soldiers took part in a drill testing the army's ability to speedily airlift special forces over long distances, the military said.
The island last held similar military manoeuvres in December 2008, but only computerised war games were held last year.
Ties between Taipei and Beijing have improved markedly since Ma Ying-jeou of the China-friendly Kuomintang party came to power in 2008, pledging to boost trade links and allowing in more Chinese tourists.
But Beijing has not ruled out the use of force against the island, which it regards as part of its territory, even though it has been ruled separately since the end of a civil war in 1949.