On December 19, an assailant set off smoke bombs inside Taipei's main metro station during rush hour before launching into a stabbing spree, killing three people and wounding 11 others.
The 27-year-old suspect was found dead later on the same day, with Taipei Mayor Chiang Wan-an saying he had apparently jumped off a building.
Officials have since called to improve emergency protocols and ensure police have adequate training to respond to incidents of violent crime, which are rare in Taiwan.
The drill conducted on Friday was aimed at boosting responses to random, indiscriminate attacks to "ensure the safety of all citizens", said Mayor Chiang.
The two mock attackers simulated throwing gasoline bombs onto the platform in a metro stop near the Taipei city government, with police evacuating passengers and putting out the pretend fire.
The attackers then moved on to a nearby bus hub and charged at people in front of a ticket counter before they were tackled down by police.
Residents had been notified of the drill, which included more than 300 participants, via text messages.
Chiang said that "through today's high-intensity drill, we will thoroughly and comprehensively review the existing defence mechanisms, leaving no stone unturned."
"We must approach all potential emergencies with a mindset of anticipating the worst-case scenario and responding decisively," he added.
Police have said following last week's attack that officers arrived on the scene relatively quickly, but had not expected the attacker to be armed.
At the metro station where the drill was taking place, product manager Shell Kuo said she was passing by but stayed to watch.
She told AFP that like other drills to prepare for an earthquake scenario, for example, "this is quite necessary, at least so that we know how to respond if a real situation arises."
Police have yet to ascertain the motive for last week's attack, which spanned Taipei's main station, an underground shopping district and another metro stop.
Officials said the rampage was "deliberate" and have "preliminarily" ruled out terrorism.
The suspect had served in the military but was discharged over driving under the influence of alcohol, according to police, who said he was wanted after failing to report for reserve training.
Investigators found searches for "random killings" on his iPad, including material related to a Taipei metro stabbing in 2014 that killed four people.
