The official Xinhua News Agency said the exercise will be a joint one among its navy, marine surveillance agency and the fishery administration.
The China-Japan dispute over the East China Sea islands -- called Senkaku in Japan and Diaoyu -- has deteriorated since the Japanese government purchased the uninhabited islands last month from their Japanese owner.
Xinhua, quoting an official statement, said a total of 11 vessels from the navy's Donghai Fleet, the fishery administration and marine surveillance agency would take part in the exercise along with eight aircraft.
The statement said the exercise is aimed at "improving coordination between the navy and administrative patrol vessels and sharpening their response to emergencies in missions to safeguard territorial sovereignty and maritime interests."
It said during China's previous missions in disputed waters, patrol vessels of its fishery administration and marine surveillance agency have been stalked, harassed and even intentionally interfered with by "foreign vessels."
During Friday's exercise, administrative vessels would practice patrol voyages with the backup of the navy vessels, and contingency plans would be tested, Xinhua said.
China and its official media have been furiously attacking Japan over the island issue in recent weeks, while asserting its own claims to the islands. The island issue has gained importance since recent reports that they and their waters are rich in energy resources.
At the recent U.N. General Assembly session, China accused Japan of stealing the islands. There have also been violent protests in various Chinese cities that have hit trade between the two countries, which are the world's second and third largest economies after the United States.
Earlier this week, China accused Japan of starting a propaganda war to strengthen its claims to the islands, with a Xinhua commentary saying Japanese Foreign Minister Koichiro Gemba's current visits to Britain, France and Germany were designed to "lobby the three Western nations for support." The report also said Japan's Foreign Ministry planned to print pamphlets about the islands in 10 languages and distribute them around the world.
In an article Tuesday in France's Le Figaro newspaper, Gemba said the Senkaku Islands are "clearly an integral part of Japanese territory."
Japan has accused Chinese surveillance vessels of making repeated intrusions into its territorial waters, Japan's Kyodo News Agency reported.
Separately, Gemba told the BBC: "The situation could have been much worse, if the government didn't buy the islands."
Taiwan also claims the disputed islands made up of five islets and three reefs.
The BBC quoted Gemba also as saying that while the islands belonged to Japan, it was important for both Japan and China to prevent further escalation of their dispute.
"Our economies are interdependent and we want to cherish the mutually beneficial relationship," he said.
China's claims to the islands come at a time when there is already much concern among its neighbors over its strong assertion of sovereignty in the South China Sea, a major international trade route.