The US State Department has approved the potential sale to Taiwan of $2.2 billion worth of arms, including Abrams tanks and Stinger missiles.
The move, announced by the Pentagon, has angered China, which views Taiwan as part of its territory and has previously expressed "serious concerns" about the possible sale.
China has urged the US to "immediately cancel" the sale.
"The sale of weapons by the United States to Taiwan ... seriously violates the one-China principle ... grossly interferes in China's internal affairs and undermines China's sovereignty and security interests," said foreign ministry spokesman Geng Shuang.
US Congress has been notified about the potential deal with the Taipei government, which would include 108 Abrams tanks, some 250 Stinger missiles, related equipment and support, according to the US Defence Security Cooperation Agency.
The proposed tank sale "will contribute to the modernisation of the recipient's main battle tank fleet, enhancing its ability to meet current and future regional threats and to strengthen its homeland defence," the DSCA said in a statement.
And the missiles would "support the foreign policy and national security of the United States by helping to improve the security and defensive capability of the recipient, an important force for political stability, military balance, and economic progress in the region," it said.
Neither would alter the "basic military balance in the region," according to the DSCA.
China also registered its opposition to the possible sale earlier this month, while in January, President Xi Jinping said China would strive to achieve peaceful "reunification" with Taiwan reserves the right to use force to bring the island under its control.