Taiwanese troops and armoured vehicles were deployed on Thursday for a mock urban street battle against China, which has long vowed to take the island.
Democratic Taiwan lives under constant threat of an invasion by authoritarian China, which claims the self-ruled island as part of its territory - by force if necessary.
Since President Tsai Ing-wen came to power in 2016, Taiwan has been subject to increased military drills and diplomatic pressure, as she regards the island as a sovereign nation.
On Thursday, two platoons faced off in a simulated battle, firing at each other from houses and sandbag barricades as tanks rolled down a street in a mock-up town, complete with signs for pharmacies and beer brands.
Urban warfare is becoming a more important training subject for the military.
Any future battle to protect Taiwan will be an urban warfare, Kiwi Yang, an instructor at Army Infantry School, told reporters that most of Taiwan's 23 million people live in cities.
The Chinese communist troops' battle plans will be invading and landing first from coastal towns, then the fighting will progress into more populated residential and commercial areas and lastly push into mountainous villages, he added.
With mountain ranges, changeable weather and limited beach landings, invading Taiwan would be a Herculean challenge for any military.
For decades, analysts agreed that China simply could not pull it off, but Beijing has closed the gap in recent years.
Sabre-rattling towards Taiwan has increased significantly under President Xi Jinping, China's most authoritarian leader in a generation who is unafraid to flex the country's geopolitical muscle.
The Chinese warplanes are making historically high levels of incursions into Taiwan's air defence zone and fears are growing that Beijing could order an invasion even if they consider it unlikely for now.
According to a database compiled by AFP, Taiwan recorded more than 380 incursions by around 970 Chinese military aircraft last year.
China has spawned several military drills that simulate an invasion of the island.
The People's Liberation Army PLA deployed hundreds of troops and dozens of tanks in a mock street combat to seize Taiwan last month, according to Chinese state television CCTV.
A team representing the PLA took the city in less than three hours after removing landmines, roadblocks and other obstacles posed by the opposing team, the report said.