The Jiaolong undersea craft -- named after a mythical sea dragon -- reached 5,038 metres (16,529 feet) below sea level in a test dive in "an international area" of the Pacific ocean, the official Xinhua news said, citing the State Oceanic Administration (SOA).
Chinese technical capabilities have gathered pace in recent decades, exemplified by a fast-growing space programme that in 2003 made China just the third nation to conduct manned space flight.
The craft is designed to reach a maximum depth of 7,000 metres and it had carried three people to 4,027 metres below sea level in a test on Thursday.
Its first attempt to reach 5,000 metres the following day was postponed due to unfavourable sea conditions.
The test dive started at 3:38am (1938 GMT Monday) with the Jiaolong carrying three people, Xinhua said.
Its success signified that the submersible would was capable of reaching over 70 percent of the planet's seabed, the SOA said, according to Xinhua.
The agency quoted the submersible's chief designer Xu Qinan as saying its "state-of-art" digital underwater communication systems and undersea mobility systems allowed it to "move back and forth easily under the sea".
Although much of the craft's components were produced in China, some had to be imported from abroad such as the underwater high-definition video-shooting and transmission equipment, Xu told Xinhua.
The deepest dive ever conducted was by the US Navy, which reached the bottom of the Mariana Trench -- the deepest point in the world's oceans at 11,000 metres -- in 1960 in a manned undersea craft.
China has pushed hard in recent years to obtain oil, minerals and other natural resources needed to fuel its growth.
It has said its development of submersible technology is aimed at scientific research and the peaceful exploration and use of natural resources.
But China's appetite for resources, rapid expansion of its military capabilities and increasingly strident territorial claims in the ocean have caused concern.
During the vessel's dive to the bottom of the disputed South China Sea last year it planted a Chinese flag in the seafloor in what was seen by some as a provocative act.
The South China Sea, which is believed to be rich in oil and gas, is claimed in whole or in part by China, Taiwan, the Philippines, Vietnam, Brunei and Malaysia.
Tensions in the region have spiked in recent months after several incidents at sea involving China and its neighbours.
Scientists say the ocean's floors contain rich deposits of a range of potentially valuable minerals.
However, some concerns also have been raised that deep-sea vessels could be used to tap into or sever communications cables.
The SOA said the submersible would attempt a 7,000-metre dive in 2012, Xinhua reported.