The dam, which is 2.3km long, now holds back the full force of the river and begins its role in controlling the floods that have regularly damaged China's farming heartland.
Enough explosives to bring down 400 ten-storey buildings were used during the destruction of the temporary dam, known as a cofferdam, Chinese state media reported.
The temporary dam was brought down in 12 seconds by a series of explosions using 191.3 tonnes of explosives planted beneath the water.
Engineers said the operation was a success and would not cause any geological damage.
Li Yong'an, general manager of China Yangtze River Three Gorges Development Corporation, said: "Blasting away the concrete cofferdam ... will spark off no severe geological disasters."
Construction of the dam, which will be the world's largest hydroelectricity project, was completed last month, but its power-generation facilities will not be finished until 2008.
It will eventually produce 22.4 million kW of electricity – enough to light up Shanghai.
More than 100 people died during the $25 billion construction project, state media reported, and 1.3 million local residents have been, or will be, relocated.