As the typhoon approached on Tuesday, 19 sailors forced to abandon ship when it took on water were airlifted to safety by helicopter.
Some flights were cancelled, a rail line was closed, shops and restaurants shut and streets were mostly deserted in the major port city of Kaohsiung.
Taiwan regularly gets hit by typhoons but they generally land along the mountainous and sparsely populated east coast facing the Pacific.
This one will make landfall on the island's flat western plain.
Krathon is forecast to hit Kaohsiung early on Wednesday afternoon then work its way across the centre of Taiwan, heading northeast, before crossing out into the East China Sea, the Central Weather Administration said.
Krathon is approaching Taiwan and is due to make landfall on the island's flat western plain. (AP PHOTO)
Kaohsiung, home to some 2.7 million people, declared a holiday and told people to stay at home as Krathon - labelled a super typhoon by the US Navy's typhoon warning centre - approached.
Li Meng-hsiang, a forecaster for Taiwan's Central Weather Administration, said the storm has reached its maximum intensity and could weaken slightly as it moves closer to Taiwan, warning of gusts of more than 150km/h for the southwest.
"The storm surge might bring tides inland," Li said.
"If it's raining heavily it will make it difficult to discharge waters and as a result, coastal areas will be subject to flooding."
Kaohsiung Mayor Chen Chi-mai, speaking to reporters after a disaster management meeting, said the strength and path of the storm were both on par with 1977's Typhoon Thelma which killed 37 people and devastated the city.
"After the typhoon, the whole of Kaohsiung was without water and electricity, just like a war," Chen said, recalling the destruction.
"As much as possible, limit going out."
Taiwan's defence ministry said it had put more than 38,000 troops on standby as Kaohsiung residents also made preparations.
Off the southeast coast, Taiwan rescue helicopters lifted 19 sailors to safety from a listing cargo vessel travelling from China to Singapore, the government said.
The sailors were taken to shelter on Taiwan's remote Orchid Island.
The transport ministry said 88 domestic and 24 international flights had been cancelled, with boats to outlying islands also stopped.
It added that all domestic flights - 234 in total - would stop on Wednesday.
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