The Changle Princess sailed from Sanya on the southern Chinese island province of Hainan on Thursday afternoon with 308 passengers on a four-day voyage, Xinhua said.
The new ship can carry 499 people and has 82 guest rooms with dining, entertainment, shopping, medical and postal services on board, it added.
Tourists will be able to visit the three islands in the Crescent group of the Paracels, Xinhua said.
China has previously said it plans to build hotels, villas and shops on the Crescent group and has also said it wants to build Maldives-style resorts around the South China Sea, though it is unclear if foreigners will ever be allowed to visit.
Countries competing to cement their rival claims have encouraged a growing civilian presence on disputed islands in the South China Sea. The first cruises from China to the Paracel islands were launched by Hainan Strait Shipping Co in 2013.
The Paracels are also claimed by Vietnam and Taiwan.