According to the Chinese Foreign Ministry, the United States actions violated Chinese law as well as global law, and constituted a serious political and military provocation.
The Arleigh Burke-class guided-missile destroyer undertook the "freedom of navigation" mission to challenge China's claim to the territory.
The US navy destroyer, which sailed closed to the island claimed by Beijing in the South China Sea, has violated worldwide law and endangered China's national security, the Chinese Foreign Ministry said.
A Navy official confirmed the operation to Fox News, saying that a US Navy P-8 reconnaissance plane flew nearby to monitor the operation, but stayed outside of the airspace claimed by China.
A US Navy warship is reported to have travelled within 12 nautical miles of an artificial island that Beijing claims as its own in the disputed South China Sea on Thursday (10 August), making China's hackles rise.
"We urge the United States to immediately correct its wrongdoing and stop provocations under the pretext of so-called "freedom of navigation"," the Chinese Defense Ministry said.
"China is very displeased with this and will bring up the issue with the USA side", the ministry said in a statement.
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Twelve nautical miles marks the territorial limits recognised internationally.
A spokeswoman for U.S. Pacific Fleet said that all Navy operations "are conducted in accordance with worldwide law and demonstrate that the United States will fly, sail, and operate wherever global law allows".
The Philippines, Vietnam, Malaysia, Taiwan and Brunei have overlapping claims.
The Trump administration has vowed to conduct more robust South China Sea operations.
The Pentagon declined to provide any details but said that all operations are conducted in accordance with worldwide law.
Tensions have risen recently after North Korea carried out two nuclear tests previous year and two ICBM tests last month, prompting a strong round of UN sanctions which angered Pyongyang who threatened to teach the United States a "severe lesson". That angered Pyongyang which has threatened to teach the United States a "severe lesson". Fueling such fears, Trump this week threatened Pyongyang with "fire and fury", while media reports said the Pentagon has worked out an operation to bomb North Korea's nuclear sites.