Ms Tsai insisted during the campaign she would maintain the "status quo" in relations with China although didn't clearly define what that would mean in practice. That has left governments around the world, including in Australia, busily assessing what a DPP win means for regional stability.

Beijing responded to the election result by calling on Ms Tsai and the international community to recognise Taiwan and the mainland as part of "one China" and "stand against any forms of Taiwan independence."

"On such a major issue as safeguarding state sovereignty and territorial integrity, the Chinese government has rock-solid determination," the foreign ministry said in a statement after the result.

Taiwan now enters a period of political limbo as the new legislature won't sit until February 1 and Ms Tsai doesn't officially take office until May 20. Analysts noted voter turnout, at just over 66 per cent, was at a record low as supporters of the KMT were resigned to defeat given Ms Tsai's strong lead in the polls throughout the campaign.

The election also saw the emergence of the New Political Party, which was born out of the student protests in early 2014 known as the Sunflower Movement. In March and April that year activists occupied parliament for three weeks to protest the fast-tracked approval of a trade pact with China. Five NPP candidates, including death metal rocker Freddy Lim, won seats in parliament on Saturday.

Separately, Chiang Kai-shek's great grandson, KMT candidate Wayne Chiang, was also elected to parliament.

While the campaign was dominated by economic issues, cross-strait relations were thrust into the spotlight in recent days after a pop singer was forced by her management company to apologise to Chinese fans for waving the Taiwanese flag.

Chou Tzu-yu, who is 16 years old and based in South Korea, released a video of the apology late Friday, in which she bowed to the camera and said there was "only one China" and she was "proud to be Chinese." The apology followed reports Chou had lost a sponsorship deal and a Chinese television station had cancelled a concert booking for her all-girl band.

After winning the election, Ms Tsai said the incident had "shaken Taiwanese society" and would "serve as a constant reminder to me about the importance of our country's strength and unity to those outside our borders."

The controversy, which has erupted across the strait, will be Ms Tsai's first test in managing relations with the mainland.

Yen Chen-shen of the Institute of International Relations at Taiwan's National Chengchi University said Ms Tsai will also come under increasing pressure to define what she means by "status quo". The DPP will have to make decisions about whether it maintains the same communication channels with the mainland, unravels the business deals already signed between the KMT and Beijing and pushes for inclusion in groups such as the Asian Infrastructure Investment Bank.