Taiwan has in recent years been under increased political and military pressure from China, which claims the island as its territory and has vowed to retake it one day.
The past year has been especially charged with Beijing enacting two massive rounds of wargames around the island, simulating a blockade of Taiwan and missile strikes.
The live-fire exercises also affected Taiwan's northeastern neighbour when ballistic missiles were launched near Japan's coastal waters, the 82-year-old ex-premier said.
"The important thing for us now is that there should be no war in the region, including the Taiwan Strait," said Aso, one of the keynote speakers at an annual security forum that gathers defence and maritime experts.
"We need to wake up now. From Taiwan to the United States and other like-minded countries, it's time to demonstrate our will and determination to fight, and our power of deterrence."
As Taiwan's close neighbour, he said that Japan "should be the first to express our attitude and also to make the message clear in the international community, including China".
"Maintaining a free and open international order based on universal values and abiding by the rule of law, especially in the Indo-Pacific region, is a major issue of life and death for Japanese security," said Aso.
Aso, a close ally of late ex-premier Shinzo Abe, remains a political heavyweight within the ruling Liberal Democratic Party and is considered one of the "kingmakers" of the conservative bloc.
Taiwan's President Tsai Ing-wen told the forum that the Indo-Pacific region's growing influence comes with "frictions" between authoritarian regimes and democracies, creating a "critical juncture".
"Authoritarian regimes become more aggressive and assertive, they are also more convinced that their alternative model is better and more adaptive than democracy," she said, adding that her administration is determined "to prevent authoritarian expansionism".
Tsai -- who is hated by Beijing for her refusal to accept China's claim on the island -- also reiterated that she does not take for granted the support of Taiwan's security partners.
"While we don't seek military confrontation and hope for a peaceful, stable and beneficial coexistence with our neighbours, Taiwan is always ready to defend our democracy and way of life," she said.
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