Nuozhadu is the fifth Chinese dam to be commissioned in Yunnan province.
Studies by the Stimson Center, a Washington think tank, say the four completed Chinese dams "are already altering the river's hydrology and impeding the flow of nutrient-rich silt that sustains soil productivity, nurtures fisheries and keeps the sea at bay in the Mekong Delta."
The longest river in Southeast Asia, the Mekong stretches 3,000 miles to the South China Sea and is home to more than 700 species of freshwater fish, including the endangered Mekong catfish.
"China's Mekong dams are so remote they receive little coverage in the Western media," Milton Osborne, a Southeast Asian expert at Lowy Institute, an international policy think tank, wrote in a blog.
Yet the dams, Osborne said, "will eventually alter the productive capabilities of mainland Southeast Asia's longest and most important river, a river vital to the sustenance of the 60 million people of the Lower Mekong Basin."
The Chinese government claims that 13.5 percent of the water in the Mekong as a whole flows through China. But Osborne says up to 40 percent of the river's volume overall sustains the dry season flow for downstream countries.
Speaking at the Asia-Pacific Economic Cooperation summit in Russia last month, Vietnamese President Truong Tan Sang warned of increasing tensions over water.
While not directly pointing the finger at China, Sang said dam projects in particular were a growing concern, affecting relations between bordering countries.
"Dam construction and stream adjustments by some countries in upstream rivers constitute a growing concern for many countries and implicitly impinge on relations between relevant countries," Radio Free Asia quotes him as saying.
The first of Nuozhadu's planned nine generators went online last month. China Huaneng Group, the main investor in the project, said the total investment could reach $9.6 billion before the project is complete, Chinese state-run news agency Xinhua reports.
When fully operational, Nuozhadu will produce an estimated 24,000 gigawatts of electricity per year. China Huaneng says energy generated by the plant will save more than nine million tons of coal annually.
While Nuozhadu is considered a power transmission project from West China to East China, China Huaneng says it will also supply power to neighboring countries Laos, Vietnam and Myanmar.
Before the project is complete, about 43,000 people must be relocated.