The young girl had been attending the Hsinchu City International Kite Festival in the town of Nanliao on Sunday.
During the event, children gathered under a large, long-tailed kite which was supposed to scatter lollies when airborne, the secretary-general of the Asian Kite Forum Chen Ko-fang told Taiwan News.
She said the kids were kept at a distance while the kite was launched, but organisers did not anticipate the strong winds.
Footage of the incident shows the 3-year-old becoming entangled in the strings, whisked into the air and thrown around.
After around 30 seconds, onlookers were able to grab the strings and pull her down.
Taiwan News reported the girl was sent to hospital with her mother after the incident.
She was given a fright but only suffered mild scratches to her face and neck.
The city's mayor Lin Chih-chien posted an apology to Facebook on Sunday.
"We immediately suspended the activities on the scene to ensure the safety of the public and to take the parents and the children to the hospital," he said.
"We also visited the hospital. Fortunately, the child is safe after the examination.
"The municipal team expresses its deepest apologies to the parties and the community at large, and we will review the reasons to avoid the recurrence of accidents, and we will take accountability and review them in-depth."