Taiwan now has formal relations with only 16 countries worldwide, but China claims Taiwan as its territory and says it has no right to formal ties with any nation.
Taiwan's Foreign Minister Joseph Wu told reporters in Taipei late on Monday that it would immediately close down its embassy in the Solomon Islands and recall all of its diplomats, Presstv Reported.
Wu said China was aiming to meddle with Taiwan's presidential and legislative elections in January with "dollar diplomacy."
"The Chinese government attacked Taiwan purposely before our presidential and legislative elections, obviously aiming to meddle with the voting. The government strongly condemns this and urges people to hold on to its sovereignty and the value of freedom and democracy," Wu said.
"Taiwan has never bowed to pressure from one single setback, and it won't be defeated by this blow," Wu said, urging support from allies in the region to defend Taiwan's much-valued freedom and democracy.
The Solomon Islands is the sixth country Taiwan will lose as a diplomatic ally since Tsai came to office in 2016 -- following Burkina Faso, the Dominican Republic, Sao Tome and Principe, Panama and El Salvador.
Tsai, who's facing an uphill battle in January's vote, has been criticized over her handling of Beijing, who suspects of her pushing for Taiwan's formal independence.
China's Foreign Ministry did not immediately respond to a request for comment.
The move came after the Solomon Islands' months-long review of the pros and cons of a switch to Beijing, which was offering $8.5 million in development funds to replace support from Taiwan.
The Solomon’s Prime Minister's office did not immediately respond to questions.
A switch in allegiance would be a prize for Beijing in its campaign to secure allies from Taiwan.
Taiwan vowed to fight China's "increasingly out of control" behavior after El Salvador switched its allegiance to Beijing last year.