In a thinly-veiled reference to China's claim over the island, Lai said he would "uphold the commitment to resist annexation or encroachment upon our sovereignty."
Lai was speaking to a crowd in Taipei to commemorate Taiwan's National Day, only nine days after Communist China celebrated its 75th anniversary.
At the same time, Lai promised to maintain "the status quo of peace and stability across the Taiwan Strait" and pledged to cooperate with Beijing on issues such as climate change, combating infectious diseases and maintaining regional security.
"The Republic of China and the People's Republic of China are not subordinates to each other," he said, in a reference to the governments of Taipei and Beijing respectively.
"On this land, democracy and freedom are thriving. The People's Republic of China has no right to represent Taiwan," he added.
Lai previously told visitors there would be "no surprises" in his national day address, in a bid to reassure them that he would not do anything further to agitate Beijing.
The disclaimer followed several speeches by President Lai over the past few months that some viewed as being provocative.
"The speech was much softer and less snarky than his recent speeches," Lev Nachman, a political scientist at the National Taiwan University, told the BBC in reference to Thursday's address. "It gives China far less ammunition to use against him."
"Nevertheless," he added, "Beijing will still find many reasons to hate this speech."
Mr Nachman said he expected a strong reaction from Beijing in the form of more military exercises in the next few days.
Last week, Lai said it was "absolutely impossible" for China to be the "motherland" of Taiwan because the island's government was founded in 1911, decades before the current Communist regime of mainland China was founded in 1949.
"On the contrary, the Republic of China may actually be the motherland of citizens of the People’s Republic of China who are over 75 years old," Lai said at a concert to mark Taiwan's National Day on Saturday.
Taiwan maintains the constitution of the Republic of China, which was founded on the Chinese mainland. When it lost a long civil war with the Communists in 1949, the Republic of China government fled to Taiwan and has been based there ever since.
Last month, Lai also questioned China's assertion that its claim over the self-ruled island was based on territorial integrity. If that were the case, he suggested, Beijing would also be pushing to reclaim other so-called historic lands that once belonged to the Chinese empire.
"If China wants to annex Taiwan... it's not for the sake of territorial integrity," Lai said, in an interview to mark his first 100 days in office.
"If it is really for the sake of territorial integrity, why doesn't China take back Russia?"
Lai referenced the 1858 Treaty of Aigun, which saw China concede large swathes of Manchuria to Russia. The concession occurred during what China refers to as the "century of humiliation," when Western powers and Japan exploited the weakened Qing Dynasty.
On Wednesday, China's government responded by saying President Lai was escalating tensions with "sinister intentions".
"Lai Ching-te's Taiwan independence fallacy is just old wine in a new bottle, and again exposes his obstinate stance on Taiwan independence and his sinister intentions of escalating hostility and confrontation," said the statement from China's Taiwan Affairs Office.
After his election in January, Lai succeeded Taiwan's previous president Tsai Ing-wen, who also came from the Democratic Progressive Party (DPP).
Lai's public comments until now are regarded by many political observers as going further than anything said by his predecessor, who was much more cautious in her public speeches.
In spite of his administration's more confrontational tone, however, Lai has stressed his position of maintaining the "status quo" between Taiwan and China.
He insists Taiwan has no need to declare independence because it is already an independent sovereign nation that has never been controlled by the People’s Republic of China.
Lai also devoted a considerable amount of Thursday's speech to domestic issues such as energy, climate change and housing.
Rupert Wingfield-Hayes and Nick Marsh