Tsai becomes Taiwan's first female president after winning a landslide victory in January to defeat the ruling Kuomintang, ending an eight-year rapprochement with Beijing under outgoing president Ma Ying-jeou.
Voters felt Ma had moved too close to China, which still sees self-ruling Taiwan as part of its territory awaiting reunification.
Beijing-sceptic Tsai swept in with a campaign to restore Taiwanese pride, a message that resonated with a public tired of living in China's shadow.
The Taiwan-centric celebrations will include 1,000 performers in a showcase of the island's history and culture, entitled "Pride of Taiwan".
Mock protesters will appear alongside singers in a "March of Taiwan Democracy" segment, billed as a performance to remind the new government to listen to the public.
Choirs will also perform "Ilha Formosa", a poetic tribute to Taiwan banned in 1979, when the KMT ruled under martial law, because it had been adopted as an anthem by opposition groups.
But the element of proceedings most closely watched -- particularly by Beijing -- will be Tsai's 30-minute inauguration speech.
Recognition of that agreement formed the bedrock of the thaw under Ma, but Tsai and her Democratic Progressive Party have never backed it.
Tsai has pledged to maintain the "status quo" with Beijing, but observers say she is highly unlikely to show any sign of compromise on the "one China" issue during her speech.
"Tsai has said repeatedly cross-strait ties will be based on democratic principle and Taiwan's public opinion, so it would be difficult for her to say the things China wants to hear," said Lai I-chung, deputy director of Taiwan Thinktank and a former director of the DPP's China affairs division.
Voters will instead want to hear how Tsai proposes to revive Taiwan's flagging economy and be reassured the island's sovereignty will remain secure.
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