Taiwan's fire department reported the casualties as television stations showed footage of buildings at precarious angles in the sparsely populated eastern county of Hualien, near the quake's epicentre.
Wednesday's quake, which knocked out power in several parts of the capital Taipei, hit at a depth of 15.5km just off the eastern coast of Taiwan, according to Taiwan's Central Weather Administration.
Japan's weather agency said several small tsunami waves reached parts of the southern prefecture of Okinawa, and later downgraded the earlier tsunami warning to an advisory. It revised the magnitude to 7.7.
The Philippines Seismology Agency also issued a warning for residents in coastal areas of several provinces, urging them to evacuate to higher ground.
The quake was felt in Shanghai, a Reuters witness said. Chinese state media said it was also felt in Fuzhou, Xiamen, Quanzhou and Ningde in China's Fujian province.
Aftershocks could still be felt in Taipei, according to a Reuters witness, with at least 25 aftershocks registered so far, according to Taiwan's central weather administration.
China Earthquake Networks Centre recorded five aftershocks of around five magnitude in Taiwan within an hour after the initial quake.
The Taipei city government has not received any reports of damage and the city's MRT was up and running soon after, while electricity operator Taipower said more than 87,000 households in Taiwan were still without power.
Southern Taiwan Science Park, where semiconductor giant Taiwan Semiconductor Manufacturing Co has a plant, said companies were operating without impact.
TSMC said its safety systems are operating normally.
"To ensure the safety of personnel, some fabs were evacuated according to company procedure. We are currently confirming the details of the impact," according to the company.
Taiwan's official central news agency said the quake was the biggest to hit the island since 1999 when a 7.6 magnitude tremor killed around 2400 people and destroyed or damaged 50,000 buildings in one of Taiwan's worst-recorded quakes.
Taiwan's Central Weather Administration said the earthquake registered the second-highest intensity of an "Upper 6" in Hualien county, on the 1-7 intensity scale.
In an Upper 6 earthquake, most unreinforced concrete-block walls collapse and people find it impossible to remain standing or move without crawling, the Japan Meteorological Agency says.
with AP
