Taiwan television stations showed footage of some collapsed buildings in Hualien, near the quake's epicentre, and media reported some people were trapped.
Wednesday's magnitude 7.2 quake could be felt as far as Shanghai, according to a Reuters witness.
The epicentre was just off the coast of eastern county of Hualien, in waters off eastern coastline of Taiwan Island, the Taiwan central weather administration said.
Japan issued an evacuation advisory for the coastal areas of the southern prefecture of Okinawa.
Japan's Meteorological Agency (JMA) forecast a tsunami of up to three metres for Japan's southwestern coast.
A 30cm tsunami reached Yonaguni Island at 1118 AEDT, the JMA said.
The Philippines Seismology Agency also issued a warning for residents in coastal areas of several provinces, urging them to evacuate to higher ground.
The quake was felt in Fuzhou, Xiamen, Quanzhou and Ningde in China's Fujian province, according to Chinese state media.
The Taipei city government has not received any reports of damage and the city's MRT was up and running soon after.
Taiwan's high speed rail operator said no damage or injuries were reported on its trains, but noted trains will be delayed while it carries out inspections.
Southern Taiwan Science Park, where semiconductor giant Taiwan Semiconductor Manufacturing Co has a plant, said companies were operating without impact.
Taiwan's official central news agency said the quake was the biggest to hit the island since 1999 when a 7.6 magnitude tremor killed around 2400 people.
with AP
