Families in downtown Qingdao, Shandong province, can now keep only one dog, which the owners must register for 400 yuan (S$81).
The new regulation, which took effect on Monday, also prohibited 40 breeds, including mastiffs, German shepherds and St. Bernards.
"An eligible dog should get a rabies vaccine and a license, and have an electronic chip implanted during the registration process," said Zhao Jun, an official at the Qingdao public security bureau.
The electronic chip, which is implanted under the skin of a dog's neck, stores information about the animal, its owner and the date of vaccination.
Registration work will start on Thursday, with 30 pet hospitals authorised to provide the service.
Zhao said dogs have become a serious social problem as increasing numbers of city dwellers are keeping them.
"Pet lovers and those who don't like animals often have disagreements, and some dogs negatively affect the city's environment and people's lives," Zhao said. "The regulation came out after the consideration of opinions of experts, officials and residents, and after reviewing domestic and international experience," Zhao said.
The new regulation allows owners six months to register their dogs. After that, the authorities will take law enforcement action against violators, including fines and confiscation of animals. The new regulation will be implemented in four heavily populated downtown districts.
Dogs registered before the new regulation was issued are not affected.
Qingdao is not the first city in China to make a one-dog policy. As early as 2009, Chengdu, Sichuan province, limited households to one dog. Harbin, Heilongjiang province, prohibited dogs taller than 50 centimeters and longer than 70 centimeters.
In 2011, Jiangmen, Guangdong province, proposed banning dogs from its urban areas. The city launched strict enforcement action in the zones, but the regulation was set aside after nine days of controversy.
Qingdao's new regulation also aroused strong opinions. Song Wencong, a 64-year-old resident, took his dog to an animal disease control and prevention centre to be registered on Thursday.
"The new regulation is reasonable and necessary to encourage dog owners to be responsible," he said.
Wang Xue, a 28-year-old pet lover, said the new regulation is good for city management, and the electronic chip can help owners find their pets if they get lost. But she said the 400 yuan administration fee was too high.