A visa scheme to allow Hong Kong residents to come to the UK opens on Sunday, with some 300,000 people expected to apply.
The visa, which is open to holders of a British National (Overseas) passport and their immediate dependents, will offer a fast track to UK citizenship.
But the Chinese foreign ministry said it would no longer recognise the BNO passport as a travel document.
The UK launched the new visa after China imposed a new security law.
Those who apply and secure the visa will be able to apply for settlement after five years and then British citizenship after a further 12 months.
Beijing has previously warned the UK not to meddle in domestic issues.
Prime Minister Boris Johnson said the move honoured the UK's "profound ties of history and friendship" with the ex-British colony.
About 7,000 people from Hong Kong have already been allowed to settle in the UK since July, the Home Office said.
Although there are 2.9 million citizens eligible to move to the UK, with a further estimated 2.3 million dependents, the government expects about 300,000 people to take up the offer in the first five years.
The 7,000 who have already arrived were allowed to settle before the scheme began by being granted Leave Outside the Rules, which gives the government discretion over immigration rules on compassionate grounds.
Mr Johnson said: "I am immensely proud that we have brought in this new route for Hong Kong BNOs to live, work and make their home in our country.
"In doing so we have honoured our profound ties of history and friendship with the people of Hong Kong, and we have stood up for freedom and autonomy - values both the UK and Hong Kong hold dear."
Chinese Ministry of Foreign Affairs spokesman Zhao Lijian called the scheme a violation of China's sovereignty and gross interference in Hong Kong and China's internal affairs, the country's state-affiliated news website The Paper reported.
"The British side disregarded the fact that Hong Kong returned to China 24 years ago," he said.
China will no longer recognise the BNO passport from Sunday. It is not yet clear what this move will mean.
Hong Kongers use their own Hong Kong passport or ID card to leave the city. To enter mainland China, they need to use their Home Return Permit, issued by Chinese immigration, unless they use a full foreign passport and apply for a visa to enter as a foreigner.
The only time they might use a BNO is upon arrival into the UK, or another country that recognises the document.
The new visa system helping British nationals escape Hong Kong is perhaps the clearest example yet of the government's promise to be a force for good in the world.
It is one thing to condemn oppression. It is another to do something about it.
And here the UK is delivering on a promise made more than two decades ago to those it has a duty to protect.
But there are questions.
What support are these migrants going to have?
In the long term they may well enrich Britain's economy and culture, but in the short term, they will need help.
Where are they going to live? Where are they going to find jobs? What if more than the predicted 300,000 or so come in the first five years? How will people in Britain respond to seeing their borders opened up?
And above all, how will China retaliate, as they have promised? Will Beijing ban BNOs from public office, from voting or even from leaving? What will the UK do then?
Those eligible for the new visa can apply online and will need to book an appointment to attend a visa application centre.
And from 23 February, BNO status holders who hold an eligible biometric passport will be able to use an app to complete their application from home.
The visa fee to stay for five years will be £250 per person - or £180 for a 30-month stay - and there is an immigration health surcharge of up to £624-a-year.
Nathan Law, a pro-democracy campaigner who fled Hong Kong and now lives in exile in the UK, welcomed the announcement.
"It's a commitment to the historical agreement to Hong Kong and I think it's important that we offer safe exit for the people who are facing political suppression in Hong Kong," he told the BBC.
Home Secretary Priti Patel said this was to give applicants greater security amid fears they could be identified and targeted by the authorities.
"Safeguarding individuals' freedoms, liberty and security is absolutely vital for those individuals that go through this process," she said.
The BNO status was created before the UK handed responsibility for Hong Kong back to China in 1997.
Before Hong Kong was returned, the UK and China made an agreement to introduce "one country, two systems", which meant, among other things, rights such as freedom of assembly, free speech and freedom of the press would be protected.
The agreement signed in 1984 was set to last until 2047.
But the UK has said this agreement - known as the Joint Declaration - is under threat because the territory passed a new law in June that gives China sweeping new controls over the people of Hong Kong.
China has said the law is necessary to prevent the type of protests seen in Hong Kong during much of 2019. However, the law has caused alarm both in Hong Kong and abroad, with opponents saying it erodes the territory's freedoms as a semi-autonomous region of China.