The 14 Chinese, who include protesters and journalists, were arrested Wednesday after they arrived by boat on Uotsuri Island in the East China Sea, The New York Times reported.
Chinese Vice Foreign Minister Zhang Zhijun "urged ... Japan immediately and unconditionally release the people and the vessel," the Chinese Foreign Ministry said in a statement.
While Japanese police could pursue charges, it is likely the Chinese citizens will be deported within the next five days, Japan's Kyodo News agency reported.
Controversy over the islands has been blamed on potential oil and reserves in the region and on fishing resources, but actually originated with the end of World War II, the International Herald Tribune reported.
The islands are claimed by Japan, China and Taiwan, with each nation calling them by different names. To Japan, they are the Sensaku. To China, they are the Diaoyu.
The activists, who had sailed from Hong Kong, slipped onto the islands Wednesday and planted the Chinese and Taiwanese flags, setting off the latest controversy. However, the issue of who owns the islands dates back to 1945 when Japan surrendered to Allied powers. The treaties it signed set up post-war conditions that Tokyo would have to live by, but left unsettled smaller matters such as who controlled the islands that lie between Japan and China.
Japan is in a similar dispute with South Korea over the Dokdo islands, or Takeshima as they are known in Japan, another thorny leftover from the war.
South Korean President Lee Myung-Bak visited the Dokdo islands last week, setting off a three-way diplomatic row. Japan recalled its ambassador from Seoul while a state-run Chinese newspaper, the People's Daily, said relations between Japan and China were now at "the freezing point."