"The more we achieve, the greater the pressure we face from China," she said.
Her speech on Taiwan's National Day came after China's President Xi Jinping vowed to "fulfil reunification".
Taiwan considers itself a sovereign state, while China views it as a breakaway province.
Beijing has not ruled out the possible use of force to achieve unification.
China sent a record number of military jets into Taiwan's air defence zone in recent days. Some analysts said the flights could be seen as a warning to Taiwan's president ahead of Sunday's National Day.
Ms Tsai was re-elected by a landslide last year on a promise to stand up to Beijing. In her speech on Sunday, she said Taiwan was "standing on democracy's first line of defence".
She said the island would not "act rashly" but would bolster its defences to "ensure that nobody can force Taiwan to take the path China has laid out for us".
That path, she said, offered "neither a free and democratic way of life for Taiwan nor sovereignty" for its 23 million people.