The Hangzhou Internet Court opened on Friday and heard its first case - a copyright infringement dispute between an online writer and a web company.
Legal agents in Hangzhou and Beijing accessed the court via their computers and the trial lasted 20 minutes.
The court's focus will be civil cases, including online shopping disputes.
Judges were sworn in and the first case was presented on a large screen in the courtroom.
Defendants and plaintiffs appear before the judge not in person, but via video-chat.
"The internet court breaks geographic boundaries and greatly saves time in traditional hearings," said Wang Jiangqiao, the court's vice-president, via state media.
In 2016, China began streaming some trials in more traditional courtrooms online in an apparent effort to boost the transparency of the legal system.
Some questioned the move, however.
"I don't think it's appropriate to broadcast trials online because many people involved in these cases probably don't want the public to share their personal information," human rights lawyer Liang Xiaojun told the BBC at the time.
In some other countries, online portals to allow people to resolve legal disputes in cyber-space already exist.
Canada's Civil Resolution Tribunal starting accepting claims for $5,000 (Â£3,000) or less in British Columbia in June.
China has launched a digital "cyber-court" to help deal with a rise in the number of internet-related claims, according to state media.