The move is aimed at tightening controls on a transplant market characterised by illegal trade in organs, often involving executed prisoners.
The rules, which will come into force on August 1, bar all use of donated bodies except for medical research and require burial once that research is complete.
"No organisation or individual is allowed to accept body donations except medical institutes, medical schools, medical research institutes and forensic research institutes," Xinhua news agency said on Saturday.
Transport of bodies into and out of China for interment would require approval from civil affairs departments, customs and inspection and quarantine authorities, it said.
Transport for medical research into and out of the country must adhere to regulations of the State Council, or cabinet, the Health Ministry and quarantine administration. All other use was banned.
The new regulation followed another which took effect on July 1 banning the sale of human organs, requiring written consent from donors and restricting the number of hospitals performing transplant operations.
That ban, announced in March, was hailed by the World Health Organisation as a positive step that would target brokers who had exploited loopholes in China's legal framework to arrange the sale of organs from executed prisoners.
Rights groups have criticised the use of organs from inmates executed in China and also hospitals who are alleged to have turned to organ sales and transplants to raise funds. They estimate 5,000 to 12,000 prisoners are put to death in China each year, more than anywhere else in the world.
China's foreign ministry has said the organs had been used without the executed prisoner's consent in only a few cases, and that doing so was illegal.
State media said that about 2 million Chinese need transplants each year, but only 20,000 receive them due to a shortage of donors, thus spurring illegal trade in some regions.