The tremor, the strongest since an earthquake in 1999 that killed thousands, lasted for nearly one minute, shaking skyscrapers in the capital, Taipei, during the lunch-hour rush.
"It was very scary. I wanted to run but didn't know where to go," an old man, who was in a restaurant in the world's tallest building, the 508-metre Taipei 101, said on television.
"It felt just like the one in 1999," said the man, who was visiting Taipei from the central mountainous county of Nantao, the epicentre of the earthquake five years ago.
Friday's tremor, which measured 7.0 on the opened-ended Richter scale, had its epicentre at about 110km east of Ilan on the north-eastern coast, at a depth of 59km, the Central Weather Bureau said.
The United States Geological Survey put the magnitude of the earthquake at 6.7.
The government's Disaster Recovery Centre said the quake damaged some houses and injured a few people, but there were no major losses or fatalities.
It did not confirm earlier television reports that a house had collapsed in the northern county of Taoyuan, injuring one.
"It was very scary. I wanted to run but didn't know where to go"
An eye witness
"There was one woman in her 40s who received minor head injuries when a water tower toppled off a tin veranda and on to the street," said a disaster official said.
A dozen workers were trapped inside the elevators of Taipei 101 - built to withstand the strongest earthquake in a 2500-year cycle - but they were rescued.
Aljazeera correspondent in Taiwan, Yunis Abd al-Hay, said all subway trains in Taipei stopped automatically for safety reasons.
The stock markets are operating as usual and the industrial cities have not reported any damage, he reported.
Seismologists told people to be prepared for aftershocks in the coming days.
"It's a 7.0 earthquake, so we will continue to have aftershocks in the next few days, but their magnitude should not exceed the main quake," Central Weather Bureau seismologist Kuo Kai-wen said.
Earthquakes occur frequently in Taiwan, which lies on a seismically active stretch of the Pacific basin.