The island holds frequent military drills in the face of increasing military and political pressures from China, including near-daily Chinese warplane incursions into its air defence zone.
Beijing claims self-ruled, democratic Taiwan as its territory and has vowed to retake it one day -- by force if necessary.
At Kaohsiung port on Saturday, the coastguard, military, police and airborne services simulated a hostage situation, accompanied by action-movie music and an ongoing narration of the "attack".
"This is (Taiwan) Coast Guard! Stop the engine immediately!" shouted the announcer. "We are going to board and inspect your ship!"
Smaller patrol boats surrounded the ship while a helicopter hovered overhead. The officers managed to "covertly" board the ship, and they opened fire -- not live rounds -- on the yellow-clad hostage takers.
At the end of the rehearsal, officers saluted President Tsai Ing-wen, who waved from the pier.
"Everyone who participated in today's drill are our country's frontline defenders. I want to emphasise again, we have to strengthen ourselves in order to ensure peace in the Taiwan Strait," Tsai said in a short speech.
"The more we are united, the more secure we are; the more secure Taiwan is, the safer the world will be."
Since Tsai -- who rejects that Taiwan is a part of China -- came to power in 2016, the island has seen increased incursions by Beijing's boats warplanes.
In April, Beijing conducted three days of military exercises simulating a blockade of the island in response to US Republican House Speaker Kevin McCarthy meeting Tsai in California.
And last August, China held four days of live-fire drills around Taiwan's territorial waters -- with some of the exercises taking place just off the coast of Kaohsiung.
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