The State Department said Krach's visit will honor Lee's legacy by "continuing our strong bonds with Taiwan and its vibrant democracy through shared political and economic values".
Although the U.S. does not have a formal diplomatic relationship with Taiwan, the 1979 Taiwan Relations Act allows it to sell arms to the island, and commits it to "close relations".
The announcement comes the same day U.S. Undersecretary for Economic Affairs Keith Krach is due to arrive in Taiwan, in a trip likely to further rile Beijing which regularly denounces United States support for the democratic island.
The party had run Taiwan for decades, partly under martial law, after Chiang Kai-shek moved it to the island following the Communist takeover of mainland China in 1949.
Beijing has repeatedly issued warnings to the United States for its dealings with Taiwan, which China considers to be part of its territory.
Earlier this year, China lashed out at the USA after the Trump administration sent health secretary Alex Azar to Taiwan to discuss a tighter relationship as well as health matters.
Washington said Krach was visiting Taiwan to attend a memorial service for late president Lee Teng-hui.
China's Ministry of Foreign Affairs insisted all official exchanges between the us and Taiwan must "immediately stop" because China "firmly opposes" them.
The Trump administration is pressing for Taiwan's inclusion as a separate entity in global organizations like the World Health Organization and worldwide Civil Aviation Organization, and is pushing back against Beijing's diplomatic victories over Taipei this year that have included several small countries abandoning diplomatic recognition of Taiwan in favor of China.
Krach is expected to meet Taiwan President Tsai Ing-wen on Friday.
China conducts military exercises as US diplomat visits Taiwan
"We look forward to more exchanges and discussions between Taiwan and the USA to solidify the foundation for further collaborations, including economic cooperation, through undersecretary Krach's visit", her office said in a statement.
Beijing discourages any official exchanges with Taiwan but in recent months Washington has dramatically increased its outreach.
On Thursday, Taiwan's foreign ministry also confirmed a rare meeting took place the day before between James Lee, its top official in NY, and Washington's ambassador to the UN Kelly Clark.
Beijing has watched with growing alarm the ever-closer relationship between Taipei and Washington, and has stepped up military exercises near the island, including two days of mass air and sea drills last week.
At a daily briefing Thursday, Chinese foreign ministry spokesperson Wang Wenbin said Krach's visit violates US commitments to China and "bolsters the separatist forces of Taiwan independence and undermines China-US relations and peace and stability across the Taiwan Strait", adding that Beijing had "lodged solemn complaints" with Washington over the matter.
The deal will be the second-biggest package of weapons provided to the island nation by its military partner Washington, following an $8 billion arms deal agreed previous year.
Trump has embraced Taiwan more closely as a way to hit back at authoritarian Beijing, especially as he seeks re-election in November.
But the United States has so far not strayed from the unwritten red line on Taiwan, as it has not sent senior officials whose primary responsibilities are foreign affairs or defence. She says the island is already an independent country called the Republic of China, Taiwan's formal name.
The missiles can be used with F-16 fighter jets that the United States has sold Taiwan.
Taiwan removed a major hurdle last month by easing safety restrictions on U.S. beef and pork - welcome news for farmers, a key constituency for Trump, as the election approaches.
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