The line expands China's rapid rail network to more than 7,430 kilometres (4,620 miles) as the nation continues to invest in building the world's largest high-speed train system, the rail authority said in a statement.
"The completion of the new rail line between Shanghai and Hangzhou will accelerate the pace of integration in the Yangtze River Delta," Shanghai Mayor Han Zheng said at an inauguration ceremony.
Officials did not say how much the 202-kilometre line cost, but previous state media reports put total investment at 29.3 billion yuan (USD 4.4 billion).At a travelling speed of 350 kilometres per hour, the line will cut travel time between the two cities from 90 to 45 minutes.
During a trial run on September 28, the train set a new speed record of 416.6 kilometres per hour, the statement said. Construction on the new line began in February 2009. China is rapidly expanding and upgrading its railway network amid increased pressures on its transportation system.
The railway authority said in July that China would spend about 120 billion dollars to nearly double the country's high-speed rail network by 2012.