The P-3C, along with a naval S-70C anti-submarine helicopter, was deployed to locate an enemy submarine and force it to the surface off the country's east coast.
It was the first time the P-3C was used in the annual Han Kuang series of military exercises, said Major General Luo Shou-he, spokesman for the Ministry of National Defense, during the drill.
Taiwan purchased 12 P-3Cs from the US and began taking delivery of the aircraft last year. The final batch is scheduled to be delivered by the end of next year, according to the Air Force.
The P-3C is an advanced aircraft for maritime patrol and anti-submarine warfare, said Vice Adm. Huang Shu-kuang, commander of the Navy's Fleet Command, adding that Wednesday's drill was a test of the military's joint interdiction capabilities.
Meanwhile, the Navy and the Air Force were working closely to carry out regular patrols, anti-submarine missions and other warfare exercises, he said.
Wednesday's drill consisted of maneuvers by 21 military vessels, including Kidd-class destroyers, Chengkung-class frigates, Knox-class frigates, Jinjiang-class patrol vessels, Kuang Hua VI-class missile boats, a Lafayette-class frigate and a submarine, the Navy said.
An Air Force P-3C, F-16A/B and F-5 fighter jets, also took part in the exercise, the Navy said.
The drill, which focused on anti-submarine, anti-surface vessel and anti-missile warfare, included the live-firing of depth charges, 76 mm naval guns, 5-inch guns and anti-submarine rockets, the Navy said.
Responding to questions about Taiwan's aging submarines, Huang said the country is hoping to acquire more submarines. "The existence of submarines serves as an effective deterrent (to our enemies)," he said.
Taiwan now has four submarines, two of which are being upgraded, Huang said.
Wednesday's drill was part of the second stage of the Han Kuang 30 exercises, which are being held Monday to Friday this week. It follows computer-aided war games in May.
Two more live-fire drills are scheduled to be held Thursday in waters off the outlying county of Penghu and at a military training base in the southern county of Pingtung, a military source said.
The Han Kuang exercises, Taiwan's most important war games, test the country's joint combat readiness and defense capabilities in the face of a continued military threat from China.
Despite an improvement in cross-strait relations in recent years, China has not renounced the use of force against Taiwan.