"We will not recognise any ADIZ by China," Taiwan defence minister Feng Shih-kuan told lawmakers in a parliamentary session.
The comments come after Taiwan's new government of President Tsai Ing-wen, of the independence-leaning ruling party, was sworn into power last month. Tsai's Democratic Progressive Party overturned eight-years of China-friendly Nationalist rule on the island.
China drew condemnation from Japan and the United States when it imposed its ADIZ, in which aircraft are supposed to identify themselves to Chinese authorities, above the East China Sea.
China has neither confirmed nor denied it plans such a zone for the South China Sea, saying that a decision would be based on the threat level and that it had every right to set one up.
"In the future, we don't rule out China designating an ADIZ. If China is on track to announce this, it could usher in a new wave of tension in the region," Taiwan's National Security Bureau said in a report presented to parliament.
US Secretary of State John Kerry said on Sunday the United States would consider any Chinese establishment of an air defence zone over the South China Sea "provocative and destabilising".
Speaking at the beginning of a high-level strategic dialogue in Beijing on Monday, Kerry said he would make it clear the United States is looking for a peaceful resolution to disputes in the South China Sea.
"The only position we've taken is, let's not resolve this by unilateral action, lets resolve this through rule of law, through diplomacy, through negotiation, and we urge all nations to find a diplomatic solution rooted in international standards and rule of law," he said.
China has been angered by what it views as provocative U.S. military patrols close to islands China controls in the South China Sea. The United States says the patrols are to protect freedom of navigation.
Taiwan's defence ministry said in its own report it would strengthen its defences on Pratas Island, in the north of the South China Sea, and on Itu Aba in the Spratly Islands.
The ministry said China is building up of its military presence in the South China Sea with deployments of anti-missile systems, drones and fast missile ships in the area.
Last month, Beijing demanded an end to US surveillance near China after two Chinese fighter jets carried out what the Pentagon said was an "unsafe" intercept of a US military reconnaissance aircraft over the South China Sea.