"The report is not true," defense ministry spokesman Huang Suey-sheng told reporters.
"It has been our principle that military aircraft or warships do not cross the middle line of the Taiwan Strait while engaging in routine missions or drills."
The denial came a day after the Beijing-backed Wen Wei Po daily said that recently a group of Taiwan jets, including US-made F-16s, allegedly tried to cross the middle line in the Taiwan Strait but were turned back by Chinese aircraft on patrol.
The paper quoted an unnamed Chinese official as saying China would "smash" Taiwanese military jets if they tried to enter Chinese airspace and accused the the island of constantly trying to create military incidents.
The stark warning came as China kept up its strident rhetoric against Taiwan at the start of a new four-year term for President Chen Shui-bian, who is seen by Beijing as a dangerous advocate of independence for the island.
Huang also hit out at some Hong Kong media which he said were carrying propaganda for Beijing.
"Some Hong Kong media, including Wen Wei Po, are generally regarded as mouthpieces of the Chinese communists. Stories they carry should be examined carefully," Huang said.
Tensions have flared up between Taipei and Beijing after Chen, leader from the pro-independence Democratic Progressive Party, took the helm of the island in 2000.
China, which claims Taiwan as part of its territory despite their split 55 years ago at the end of a civil war, has said it would invade if the island declared independence or descended into chaos.