The Taiwan Affairs Office of the State Council said it had no knowledge of an alleged espionage case in which the three retired Taiwanese officers are suspected of leaking information to Chinese mainland intelligence authorities.
Yang Yi, spokesman for the Taiwan Affairs Office, declined to make further comment, a report by the semi-official Global Times newspaper in Beijing, said.
TAO is charged with overseeing and promoting business, tourism links between communist mainland Peoples Republic of China and the Republic of China, as Taiwan is officially called.
TAO also is charged with promoting unification of the two China's, which have been separate since 1949 when the defeated Chinese Nationalists -- the Kuomintang government and led by Chiang Kai-shek -- fled to the island.
Reports by Taiwan's media called the affair one of the country's worst cases of espionage, a report by the Taipei Times newspaper said.
Taiwan's Ministry of National Defense named one of the three arrested as Cmdr. Chang Chih-hsin, former director of the political warfare department at the Naval Meteorological and Oceanographic Office.
Chang was indicted by military prosecutors on suspicion of working as an agent for the communist Chinese.
"Chang, who initiated contact with (mainland) Chinese officials while still serving in the navy, was suspected of luring his former colleagues and making illegal gains," the ministry said.
Ministry spokesman David Lo confirmed two other former military officers had been arrested in connection with the case, the Taipei Times said.
The ministry had been investigating Chang before he retired in May and visited China in August, a report by the BBC said, citing local media sources which also claimed eight officers had been arrested.
Despite relations between the two Chinese countries being particularly good in the past several years, the spy allegation case raises questions about the increasing practice of Taiwan's retired officers, including generals, visiting China, the BBC said.
The Chinese-language Apple Daily reported that Chang was arrested by military authorities at his home last month as he was about to travel to China.
One the highest profile spying cases in the past 50 years was that of Gen. Lo Hsien-che, former head of communications and electronic information at Taiwan's army headquarters.
Lo was arrested in January 2011 on suspicion of spying during his posting to Thailand from 2002-05. Chinese agents allegedly set a "honey trap" operation in 2004 to guarantee Lo's continuing cooperation.
In July last year The Taipei Times reported that a military high court sentenced Lo, who pleaded guilty, to life in prison for providing military secrets to China.
Because he pleaded guilty, he was spared the death sentence, the Taipei Times report said.
The court said Lo had on five occasions delivered classified information to Beijing and likely had received payments of around $1 million since 2004.