Plans for the wide-body jet were first unveiled last June when visiting Russian President Vladimir Putin met China's Xi Jinping in Beijing.
State-run Chinese manufacturer Commercial Aircraft Corporation of China (COMAC) and Russia's United Aircraft Corporation (UAC) said they formally established the previously announced joint venture in Shanghai on Monday.
Plans for the wide-body jet were first unveiled last June when visiting Russian President Vladimir Putin met China's Xi Jinping in Beijing, and Chinese state media have previously quoted officials saying the project could be worth between $13 billion and $20 billion.
"The establishment of the joint-venture company symbolises the important progress made in the China-Russia long-range wide-body passenger aircraft project," COMAC chairman Jin Zhuanglong said in a statement.
"We will cooperate sincerely with UAC, unite as one, and strive to make the .... project a model of Sino-Russian cooperation."
China had already logged a key milestone in the country's ambitious journey to compete with the world's leading aircraft makers in early May with the test flight in Shanghai of COMAC's narrow-body C919 jet.
The 168-seat C919, built for shorter regional routes, represents nearly a decade of effort in a government-mandated drive to reduce dependence on European consortium Airbus and US aerospace giant Boeing.
Airbus and Boeing dominate China's market for passenger jets, which is growing in leaps and bounds as travel demand by Chinese consumers skyrockets.
Aviation analysts, while acknowledging the C919 as a technical milestone for China, have warned that it faces a tough task challenging against Boeing and Airbus, with their deep market penetration and long history of performance.
But with the China-Russia jet, which Chinese media reports say will be called the 929, Beijing will have the benefit of working with UAC, parent of passenger-jet manufacturer Sukhoi and other established Russian aviation brands.
COMAC's statement said the aircraft will be able to seat 280 passengers and have a range of 12,000 kilometres (7,450 miles).
That would put it in direct competition with Boeing’s 787 and the Airbus A350.
China's state-run Global Times newspaper late last year quoted UAC president Yury Slyusar as saying the project would be worth between $13 billion and $20 billion, with each side contributing half.
In Monday's joint statement, Slyusar said the project is "testimony to China and Russia's determination to engage in long-term cooperation".
COMAC said last year the planned jet could take its first flight in seven years, with deliveries beginning three years after that.
Previous Chinese aerospace projects have suffered lengthy delays.
China is expected to become the world's largest aviation market within several years, and President Xi has stressed the importance of Chinese-made jets handling much of that growing traffic.
Airbus has estimated China will need nearly 6,000 new planes worth $945 billion in the next two decades, with Boeing's forecast even more optimistic at more than $1 trillion.