Analysts were sceptical on Saturday night that Tsai would be selected by her party to contest the next presidential election.
While Saturday's polls were largely decided by local concerns, Beijing cast a heavy shadow after two years of unrelenting efforts to restrict Taiwan's participation in global society and advertise its threat to use force to bring the island under its control.
Democratic Progressive Party loses Kaohsiung mayoral race - a city held for two decades. The Nationalists also defeated the DPP in the central city of Taichung, home to much of Taiwan's light industry, while Ko Wen-je, the independent mayor of Taipei, the capital, narrowly won a second term.
In all, the DDP, which going into the election controlled 13 cities and counties out of a total of 23, retained only six cities and counties, while the KMT, which controlled six cities and counties, won nine more regions, bringing the total under its jurisdiction to 15.
Such was the case for KMT mayoral candidate Han Kuo-yu, who took DPP stronghold Kaohsiung, he told Guancha.cn, a news portal.
But some Chinese experts said the polls focused on bread-and-butter issues and the results do not show a shift in sentiment towards reunification with the mainland.
Tsai apologized to the party's supporters for the party's disappointing performance.
Pro-Taiwan independence activists call for the referendum on the streets in front of the headquarters of the ruling Democratic Progressive Party (DPP) during a demonstration in Taipei on October 20, 2018.
Tsai has pitched herself and her party as champions for democracy in the face of rising pressure from China, which sees Taiwan as part of its territory to be reunified.
However, a spokesman on Sunday was quick to cite the election results as evidence that Taiwanese were becoming fed up with Tsai's approach.
The president said her administration is moving in the right direction and has launched several major reforms over the past two years since she came into office, but she admitted that Taiwanese people are clearly setting an even higher standard for the party.
Professor Jin Canrong from Renmin University said election campaigning focused on bread-and-butter issues such as the economy, and one notable trend was greater personalisation in Taiwanese politics, where people voted more for individuals instead of along party lines.
Chan Hoi-yan's sizable victory in the Kowloon West constituency ends the opposition's hopes of regaining veto power in the assembly and continues to reduce the influence of the pro-democracy camp that has been shrinking since widespread 2014 demonstrations fizzled out with little result.
Vote counts have started but results are not expected until late Saturday.
A referendum proposing to change the name under which Taiwan competes at worldwide sports events, which has already angered China, was defeated by 5.5 million votes, with 4.6 million in favor.
"The people of Taiwan may not want reunification - and the number who want independence may actually be growing - but they have made it clear that Tsai has been naive to think that that means they don't want to do business with the mainland", he said.
"Pro-family" groups have put forward a referendum calling for marriage to be legally defined as between a man and a woman and for same-sex unions to be governed by a separate law. Beijing, which has never given up its claim to Taiwan, denies the allegations.