China is halting co-operation with the US in several key areas including climate change, military talks and efforts to combat international crime.
The new measures follow a trip to Taiwan by a US congressional delegation led by senior Democrat Nancy Pelosi.
China, which also announced it was sanctioning Ms Pelosi and her family, views the visit as a challenge to its claims of sovereignty over Taiwan.
The self-ruled island sees itself as distinct from the mainland.
The measures were announced by China’s foreign ministry on Friday. It said dialogue between US and Chinese defence officials would be cancelled, while co-operation on returning illegal immigrants, climate change, and investigating international crime would be suspended.
The two major powers have maintained cordial diplomatic ties on the need to combat climate change in recent years. At last year’s climate summit in Glasgow, China vowed to work “with urgency” with the US to cut emissions.
The countries have also found rare common cause on efforts to fight the trade of illegal drugs such as fentanyl.
The decision to halt co-operation was taken because Ms Pelosi visited Taiwan “in disregard of China’s strong opposition and serious representations,” the Chinese ministry said in a statement.
It also accused the US delegation and Ms Pelosi – who is the highest-ranking US politician to travel to the island in 25 years – of “egregious provocations”.
Although the US does not officially recognise Taiwan, it maintains strong relations with the island – which includes selling weapons for Taiwan to defend itself.
Ms Pelosi is currently in Japan on the final leg of an Asia tour, and said on Friday that China “will not isolate Taiwan by preventing us to travel there”.