China's Foreign Ministry expressed "grave concern" over comments by Japanese Chief Cabinet Secretary Yoshihide Suga that Tokyo may station officials on the islands, known as Senkaku to the Japanese and Diaoyu in China.
China maintains the islands are its territory although they and the waters close around them have been under Japanese control for about 40 years.
China's official Xinhua News Agency quoted Chinese Foreign Ministry spokesman Hong Lei as saying China won't tolerate actions that violate its territorial sovereignty.
Hong urged Japan to "stop all provocative actions that undermine China's sovereignty" and "eliminate obstacles for improving bilateral relations."
Tension between Beijing and Tokyo has been high since Japan bought three of the five uninhabited islands from their private Japanese owner in September 2012.
The islands lie about 100 miles north of Japan's Ishigaki Island and about 115 miles northeast of Taiwan.
At the end of World War II the islands were under U.S. jurisdiction as part of the captured Japanese island of Okinawa. Japan has administered them since 1972 when Okinawa was returned to Japan.
The Japanese Cabinet secretary's comments come as seven Chinese patrol ships entered waters around the islands this week -- the latest of many incursions in the area, the Japanese coast guard said.
The coast guard also spotted a drone in the vicinity Monday that it believes could have been Chinese, Japan's Kyodo News reported Tuesday.
The unmanned aircraft didn't violate Japanese airspace, but flew about 120 miles northeast of the islands.
The drone then circled the islands and left in the direction of the Chinese mainland, Kyodo reported.
Japan's air force scrambled fighter jets as it did the day before after two Chinese bombers flew near Japanese airspace to pass through to the Pacific, Japan's Defense Ministry said.
The nationality of the drone was in doubt because it bore no national markings, the ministry said.
Xinhua, in a long article Tuesday, described the latest patrol by Chinese ships around the islands as another of China's "historical breakthroughs in its regular patrols by ships and planes."
Xinhua also described the Chinese government's patrols around the islands in the past year which on several occasions turned back fishing boats of "Japanese right-wing activists."
In April, "a fleet of 10 Chinese law-enforcement ships drove away 10 Japanese fishing boats for their illegal activities in the waters surrounding the Diaoyu Islands."
The Xinhua report said last month Chinese coast guard ships drove away fishing boats of "Japanese right-wing activists which were escorted by ships from Japan's coast guard" and monitored them for more than a day.