Su Tseng-chang took charge of the Cabinet amid tense relations with China, which threatens to use force to take control of the island it claims as its own.
Beijing responded to Tsai's 2016 victory by cutting all contacts with her government and has ratcheted up economic and diplomatic pressure on the self-governing democracy.
The opposition Nationalist Party, which favours closer ties with Beijing, won 15 of 22 major seats in the November 24 elections, including in the DPP's southern stronghold of Kaohsiung.
Analysts attributed the DPP's election losses to disappointment with the performance of Tsai's government, which had won a broad mandate, including seizing a majority in the legislature from the Nationalists for the first time since full democracy was attained three decades ago.
China's pressure campaign has increased Taiwan's international isolation, reducing its number of diplomatic allies to just 17, excluding its representatives to international gatherings, and forcing international companies to designate Taiwan as a part of China.
Chinese President Xi Jinping renewed the threat of invasion in a January 2 address, saying the ruling communists "made no promises to abandon the use of force."
The island's high-tech economy continues to grow at a sluggish pace, and salaries for graduates have remain flat, increasing the lure of opportunities in China.
Efforts at pension and fiscal reform have also been unpopular.
Su, 71, was a human rights lawyer and co-founder of the DPP during the former martial law era under the Nationalists, who shifted their government from China to Taiwan after defeat by the communists on the mainland in 1949.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)