With the KMT widely tipped to lose presidential elections in January and party heavyweights reluctant to stand, pro-China Hung Hsiu-chu became its unlikely candidate despite conservative views that fly in the face of public sentiment.
An initial surge of support quickly waned as concerns grew over her China policy and Beijing-sceptic Democratic Progressive Party (DPP) candidate Tsai Ing-wen raced ahead in the polls.
Desperate to avoid an embarrassing rout, KMT party representatives gathered at an emergency meeting today and voted to cancel her candidacy.
"This is a critical moment," he told the congress, warning that "comprehensive defeat" in January would give carte blanche to the DPP and endanger cross-strait relations.
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Members voted overwhelmingly to ditch Hung with 812 of 891 voters saying she should go.
Hung said before the vote that she would respect the party's decision.
"The party can abandon me, but I wont give up on the party," she said in an address met with loud cheers.
Taiwan is self-ruling after splitting from mainland China in 1949 after a civil war, but Beijing still considers it part of its territory awaiting unification, by force if necessary.
Improved relations since current president Ma Ying-jeou came to power in 2008 have seen trade deals and a tourist boom, but many voters feel benefits have not trickled down to ordinary people and there are fears over increased Chinese influence.
The KMT adheres to the "1992 consensus" - a tacit agreement between the party and Beijing which acknowledges there is "one China" but allows each side their own interpretation.
Hung, however, has historically taken a pro-unification stance and espouses a peace agreement with China.
Around 300 Hung supporters gathered to protest outside the Sun Yat-sen Memorial Hall in central Taipei where the vote took place.