The two countries signed a communique on the establishment of ties in the early hours of Friday in the Chinese city of Tianjin.
The Nicaraguan government announced its decision to cut off relations with Taiwan in favour of developing ties with China on Thursday. The United States has condemned the move, saying that the government led by President Daniel Ortega was not reflecting the will of the Nicaraguan people and the Latin American nation would lose a steadfast partner.
Taiwan has been governed independently from mainland China since the end of the Chinese Civil War in 1949. Beijing views the island as its province, while Taiwan (formally, the Republic of China) maintains that it is an autonomous country and has political and economic relations with several other nations.