The announcement comes the day before Chinese President Xi Jinping and US President Donald Trump meet in Florida.
Taiwan has never built its own submarines before. The new diesel-powered additions will go towards upgrading its ageing foreign fleet.
"In our indigenous submarine project, we hope to be able to make eight submarines," said Lee Tsung-hsiao, navy chief of staff, after a report on the project was presented at a legislative hearing.
Last month, Taiwanese President Tsai Ing-wen expressed a need for upgrading defences while on a tour of part of the fleet.
"Strengthening underwater combat capabilities is most needed for Taiwan's defence," she said.
China regards democratic Taiwan as part of its territory, and has never renounced the threat of taking it back by force.
Taiwan's defence minister has accused China of having more than 1,000 missiles pointed at the island.
Taiwan's submarines are already being designed and should be in service within a decade.
They will replace the island's current fleet of four ageing vessels - two from the Netherlands and two from the United States. The US ships are from World War Two.
Taiwan usually relies on Washington for arms sales, but those have slowed in recent years because of objections from China, which has threatened to force the island to reunify.
Taipei has concluded that if it wants the latest weapons, it will have to build them itself.
Both China and the US have accused each other of "militarising" the South China Sea, where territory is disputed by China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei.
The US is obligated under its own laws (the Taiwan Relations Act) to help Taiwan defend itself.
President Trump has predicted Thursday's talks with Mr Xi will be "very difficult".
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