Led by solid performances from Feng Zhe and Zhang Chenglong, both members of the last two world championship teams, the Chinese bounced back from a dismal qualifying performance to dominate the finals.
The Americans, meanwhile, stumbled to fifth place after leading the qualifying.
The biggest cheers, however, went to the bronze medal winning British team. It was the first time Britain had won a medal in men's team gymnastics since it took the 1912 bronze in Stockholm.
Japan finished second, although the first scores posted at the end of the competition indicated Britain was second and Japan third.
One of the Japanese scores was adjusted after the event, moving that team in front of the home squad. Loud boos rang out in the arena when the change was announced.
China finished with a point total of 275.997. Japan had 271.952 points while Britain wound up with 271.711.
Then came Ukraine at 271.256 and the United States with 269.952.
The Chinese effort was highlighted by a strong performance on the parallel bars, where Feng turned in the best score of the entire competition at 15.950. Zhang tied for second best among all the gymnasts with a 15.600.
The Americans struggled throughout the competition, but were particularly plagued on the pommel horse -- where they had the next-to-last point total among the eight teams that took part in the finals. They managed only a 40.633 total on that apparatus while China was putting together a 43.833.
China had the best team total in three of the six exercise groups.
This was the second consecutive Olympic gold medal in the event for the Chinese and they have won three of the last four.