Vice President Lai, who won the January presidential election to succeed Tsai Ing-wen, will take office on May 20 at a time of growing tensions between Taiwan and China.
Beijing claims the self-ruled island as part of its territory and has never renounced the use of force to bring Taiwan under its control.
China has ramped up military and political pressure in recent years and has denounced Lai as a "dangerous separatist" because he -- like Tsai -- refuses to acknowledge Beijing's claim.
"(T)he health of the island's 23 million inhabitants is just one part of a much larger task he is inheriting: ensuring his government's very survival, amid China's amped-up campaign to reclaim the nascent democracy," Jon Huntsman, a former governor of Utah and one-time US ambassador to China, wrote in Time.
He added Taiwan's "risk profile couldn't be higher".
Taiwan's Presidential Office praised Lai's entry to the list, calling it an "important recognition from the international community to the democratic achievements" of the Taiwanese people.
It added Lai would "bear the crucial responsibility of safeguarding Taiwan's democracy".
Also making Time's list of the influential was Chinese Premier Li Qiang, who ascended to the country's number-two position last year.
Tsai made the list in 2020, with Republican senator Ted Cruz calling her a "signal light casting out China's looming shadow, conveying to the world that Taiwan will not acquiesce to the Chinese Communist Party".
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