More than 1800 poultry were found dead on 22 December on a farm in Sichuan's Dazhu county and Agriculture Ministry officials sent to the area confirmed the birds had the H5N1 strain of the virus, the report said on Wednesday.
Since then, 12,900 poultry in the area had been culled to try to contain the virus, which is found mostly in birds but which scientists fear could mutate into a form that can pass easily between people, leading to a pandemic.
Scientists are worried because the virus, although hard for humans to catch, has killed more than half the people reported to have been infected.
Since late 2003, more than 70 people have died in Asia from bird flu and the virus is endemic in poultry flocks in parts of the region, highlighting the urgency in trying to control the disease and prevent more human infections.
China has confirmed seven human cases of bird flu, including three deaths.
Last year, the country had more than 30 outbreaks of bird flu in poultry and culled and vaccinated millions of birds, but officials say the preponderance of small family farms, a lack of well-trained local officials and the world's biggest poultry population will make it hard to contain the disease.