By Agence France-Presse
The announcement came after Taiwan said for the first time last week that it is capable of launching missiles at China as it warned of an increased invasion risk.
China still sees Taiwan as part of its territory to be brought back into its fold, by force if necessary, even though the island has been self-governing since the two sides split after a civil war in 1949.
Ties have worsened since Beijing-sceptic President Tsai Ing-wen took power last year, ending an eight-year rapprochement.
The DF-16 (Dongfeng 16) is capable of precise strikes against Taiwan and has been deployed by the Rocket Force of the People's Liberation Army, defence minister Feng Shih-kuan said.
Feng told lawmakers the development comes as China "strengthens its weaponry modernisation and military hard power".
He did not say how many missiles had been deployed or where.
Taiwan has said China is targeting the island with around 1,500 missiles -- this is the first time the defence ministry identified the DF-16 as among them.
Beijing has severed all official communications with Taipei since Tsai became leader in May and has been accused of blocking the island's political representatives from attending international events.
China is highly suspicious of Tsai, whose Democratic Progressive Party is traditionally pro-independence.
Taiwan has never formally split from the mainland and China has warned of military consequences if it did.
Feng added that China's six recent drills in the Western Pacific and sending its sole aircraft carrier through the Taiwan Strait were designed to "pressure Taiwan to follow its plans in the development of cross-strait relations".
China displayed the DF-16 among a variety of short- and intermediate-range ballistic missiles at a military parade in Beijing in 2015 to commemorate the 70th anniversary of Japan's World War II defeat.
Military experts said the missile has a range of between 1,000 and 1,500 kilometres (600 and 900 miles) and can reach US military bases in Okinawa. It is capable of pinpoint precision and can carry two or more warheads to conduct multi-target attacks.
When asked by lawmakers how Taiwan would handle the new threat, Feng said the island's Patriot Advanced Capability-3 (PAC-3) anti-missile system could intercept the DF-16.
"We are confident in our surveillance to detect any unfriendly action towards us ... We have sufficient weaponry to shoot it down outside our territory," he said.
Taiwan pledged to build up its military in the face of the China threat in a four-yearly defence report unveiled last week.
The island's military, which consists of around 200,000 troops, is a fraction of China's 2.3 million-strong army.