The typhoon was packing gusts of up to 245 kilometres an hour (152 miles an hour) as it rumbled towards the eastern county of Hualien, where it is due to make landfall early Friday, according to Taiwan's Central Weather Bureau.
The storm is expected to dump torrential rain on the whole island with mountainous areas forecast to be deluged with up to 500 millimetres (20 inches), potentially triggering landslides that have in the past claimed hundreds of lives.
More than 35,000 soldiers are on standby to help with evacuations and disaster relief, while 90 shelters have been set up.
Most domestic flights were grounded while 59 international flights would be affected, Taipei's two main airports said.
The popular tourist spots of Green Island and Orchid Island, which have already evacuated thousands of visitors since Tuesday, announced the closure of all schools and offices on Thursday.
Conditions are expected to deteriorate significantly before the storm hits, the weather bureau said.
"Its storm circle is gradually approaching the waters off southeastern Taiwan, posing a threat to all regions and Penghu," it added.
The storm had a radius of 200 kilometres and was moving west-northwest at a speed of 14 kilometres an hour.
The storm is forecast to hit southern China as a typhoon after battering Taiwan.
Super typhoon Dujuan killed three people and left more than 300 injured in Taiwan last year, leaving a trail of destruction in its wake.
In 2009, Typhoon Morakot devastated the island, killing more than 600 people, most of them buried in huge landslides in the south.
