The deal will see the US and UK give Australia the technology to build nuclear-powered submarines for the first time.
It is being widely viewed as an effort to counter China's influence in the contested South China Sea.
The region has been a flashpoint for years and tensions there remain high.
Chinese foreign ministry spokesman Zhao Lijian said the alliance risked "severely damaging regional peace... and intensifying the arms race".
He criticised what he called "the obsolete Cold War... mentality" and warned the three countries were "hurting their own interests".
The US is sharing its submarine technology for the first time in 50 years, having previously only shared it with the UK.
It means Australia will now be able to build nuclear-powered submarines that are faster and harder to detect than conventionally powered fleets. They can stay submerged for months and shoot missiles longer distances - although Australia says it has no intention of putting nuclear weapons on them.
The new partnership, under the name Aukus, was announced in a joint virtual press conference between US President Joe Biden, UK Prime Minister Boris Johnson and his Australian counterpart Scott Morrison on Wednesday evening and Thursday morning.
And while China was not mentioned directly, the three leaders referred repeatedly to regional security concerns which they said had "grown significantly".
"This is an historic opportunity for the three nations, with like-minded allies and partners, to protect shared values and promote security and prosperity in the Indo-Pacific region," a joint statement read.