Adm. Robert Willard told Japan's Asahi Shimbun newspaper that he believed the Chinese anti-ship ballistic missile program had achieved "initial operational capability," meaning that a workable design had been settled on and was being further developed.
Known among defense analysts as a "carrier killer," the Dong Feng 21D missile would be a game-changer in the Asian security environment, where U.S. Navy aircraft carrier battle groups have ruled the waves since the end of World War II.
The DF 21D's uniqueness is in its ability to hit a powerfully defended moving target with pinpoint precision - a capability U.S. naval planners are scrambling to deal with.
The system's component parts have likely been designed and tested, but U.S. sources have not detected an over-water test to see how well it can target a moving ship, Willard said.
Years of tests are probably still needed before the missile can be fully deployed, he said. The system requires state-of-the-art guidance systems, and some experts believe it will take China a decade or so to field a reliable threat.
The missile is considered a key component of China's strategy of denying U.S. planes and ships access to waters off its coast. The strategy includes overlapping layers of air defense systems, naval assets such as submarines, and advanced ballistic missile systems - all woven together with a network of satellites.
At its most capable, the DF 21D could be launched from land with enough accuracy to penetrate the defenses of even the most advanced moving aircraft carrier at a distance of more than 900 miles (1,500 kilometers).
That could seriously weaken Washington's ability to intervene in any potential conflict over Taiwan or North Korea, as well as deny U.S. ships safe access to international waters near China's 11,200-mile (18,000-kilometer) -long coastline.
Foreign Ministry spokeswoman Jiang Yu on Tuesday referred questions about Willard's comments to military departments, but reiterated China's insistence that its expanding military threatens no one.
"I can say that China pursues a defensive national policy. ... We pose no threat to other countries. We will always be a force in safeguarding regional peace and stability," Jiang told reporters at a regularly scheduled news conference.
While China's Defense Ministry never comments on new weapons before they become operational, the DF 21D - which would travel at 10 times the speed of sound and carry conventional payloads - has been much discussed by military buffs online.