At least six people were injured and most rail services and hundreds of domestic and international flights were cancelled as the typhoon, packing winds of up to to 173 kilometres (107 miles) per hour, hurtled towards the island, authorities said.
The typhoon also disrupted power and telephone services in nearly 100,000 households, while some 250 residents in northern mountain villages were evacuated to safety, said the National Fire Agency.
A 21-year-old motorcyclist was injured when a fence collapsed while another man was hit by a rock in northern Taoyuan county, the agency said.
Four passengers suffered minor injuries when a bus rammed into a toll gate in southern Taiwan, the TVBS news channel reported.
The authorities also put more than 100 rivers on flood alert.
Schools across the island were shut down for the weekend as a precaution and thousands of fishing boats were also sheltering in ports.
Organisers have cancelled or postponed outdoor celebrations in Taipei and several other cities for the weekend's Mid-Autumn Festival.
"Sinlaku is expected to be nearest early Sunday but its impact is likely to last till Monday as it is moving very slowly," a Central Weather Bureau forecaster said.
The bureau has warned residents across the island, particularly those in coastal and mountain regions, to take precautions against flooding and mudslides as the typhoon is expected to generate rainfall of up to 1,300 millimetres (50 inches).
Sinlaku evoked painful memories of Typhoon Nari, which hit Taiwan in September 2001, leaving 94 people dead and causing severe flooding.
Two tropical storms pounded the island in July, leaving at least 22 people dead and causing hundreds of millions of dollars in damage to agriculture.
