Daniel Ortega, who was elected back to power in Nicaragua in 2007, had maintained ties with Taipei until now.
The Nicaraguan government has seized the former embassy and diplomatic offices of Taiwan, claiming that they belong to China.
President Daniel Ortega's government broke off relations with Taiwan this month, saying it would recognise only the mainland government.
Before departing, Taiwanese diplomats attempted to donate the properties to the Roman Catholic archdiocese of Managua, but Ortega's government said late Sunday that any such donation would be invalid and that the building in an upscale Managua neighborhood belongs to China.
The Attorney General's Office specified in a statement that the attempted donation was a "maneuver and subterfuge to take what doesn't belong to them".
The Central American country added in early December that it would officially recognise only China, which claims self-ruled Taiwan as part of its territory.
"There is only one China," the Nicaraguan government said in a statement announcing the change.
"The People's Republic of China is the only legitimate government that represents all China, and Taiwan is an inalienable part of the Chinese territory."
The move increased Taiwan's diplomatic isolation on the international stage, even as the island has stepped up official exchanges with countries such as Lithuania and Slovakia, which do not formally recognise Taiwan as a country.
Now, Taiwan has 14 formal diplomatic allies remaining.
China has been poaching Taiwan's diplomatic allies over the past few years, reducing the number of countries that recognise the democratic island as a sovereign nation.
China is against Taiwan representing itself in global forums or in diplomacy. The Solomon Islands chose to recognise China in 2019, cutting diplomatic ties with Taiwan.
Taiwan depicts itself as a defender of democracy, while Ortega was reelected in November in what the White House called a "pantomime election".
Nicaragua established diplomatic relations with Taiwan in the 1990s, when president Violeta Chamorro assumed power after defeating Ortega's Sandinista movement at the polls.
Ortega, who was elected back to power in 2007, had maintained ties with Taipei until now.