China has committed genocide in its repression of the Uighurs and other mainly Muslim peoples, US Secretary of State Mike Pompeo said on Tuesday.
President-elect Joe Biden's choice for secretary of state, Antony Blinken, has said he agrees with the finding.
Rights groups believe that China detained up to a million Uighurs over the past few years in what the state defines as "re-education camps".
BBC investigations suggest that Uighurs are being used as forced labour.
Tensions with China have been a defining feature of Donald Trump's term, from trade policies to the coronavirus pandemic.
"I believe this genocide is ongoing, and that we are witnessing the systematic attempt to destroy Uighurs by the Chinese party-state," Mr Pompeo said in a statement on Monday, his last day in office as part of Donald Trump's administration.
China reacted angrily, dismissing the statement as "outrageous lies".
"We see this so-called determination as a piece of waste paper," said foreign ministry spokesperson Hua Chunying. "We hope the new US administration can have their own reasonable and cool-minded judgment of Xinjiang issues."
While the Pompeo statement puts pressure on China, it does not automatically introduce any fresh penalties.
Mr Blinken was asked at his confirmation hearing on Tuesday if he agreed with Mr Pompeo's announcement, to which he answered: "That would be my judgment as well."
He added: "On the Uighurs I think we're very much in agreement. And the forcing of men, women and children into concentration camps, trying to, in effect, re-educate them to be adherents to the ideology of the Chinese Communist Party, all of that speaks to an effort to commit genocide."
Mr Biden's team made a similar argument last August, saying the Uighurs had suffered "unspeakable oppression... at the hands of China's authoritarian government".
Pressure on China - and Biden
Analysis by the BBC Chinese service
On its very last day, the Trump administration has delivered its final "gift" to China, in the form of a parting shot.
This is by far the strongest condemnation by any country regarding China's actions in its north-western region of Xinjiang. The EU, the UK and Australia, which have repeatedly criticised the human rights situation in Xinjiang, may consider following suit.
It could lead to unprecedented international pressure facing China, but would that change Beijing's behaviour? Today's Beijing is emboldened by the consolidation of political power, positive economic growth amid a pandemic, and to some degree, political chaos in Washington. A Chinese state media representative quickly hit back that the US has "committed genocide" of Americans with its botched handling of the pandemic.
For many countries including the US, economic ties with China have become too substantial to be entirely cut off. Between human rights and economic interests, the balancing act towards China is getting increasingly difficult.
Although the Biden team had referred to the suppression against Uighurs as "genocide", Xinjiang may not have been one of its priority issues. But the new administration will now be compelled to announce a concrete policy position on Xinjiang. It's clear that the tit-for-tat between Beijing and Washington will not finish with Mr Trump's term in the White House.
What is the situation in Xinjiang?
China says it is fighting "three evil forces" of separatism, terrorism, and extremism in the far western region of Xinjiang, where most of the 11 million Uighurs live. It says its "training measures" in Xinjiang are necessary to combat these.
Xinjiang has seen a large influx of settlers from China's ethnic Han majority. Anti-Han and separatist sentiment rose in the territory from the 1990s, flaring into violence on occasion, but in recent years a massive security crackdown has crushed dissent.
Xinjiang is now covered by a pervasive network of surveillance, including police, checkpoints, and cameras that scan everything from number plates to individual faces. The Chinese government says the measures are necessary to combat separatist violence in the region, but it is accused of exaggerating the threat in order to justify repression of the Uighurs.
Campaigners say China is trying to eradicate the Uighur culture, by forcing Muslims to eat pork and drink alcohol.
Last week, Mr Trump's administration banned the import of cotton and tomato products from the Xinjiang region of China, where the majority of Uighurs live.
Xinjiang accounts for nearly a fifth of world cotton production, the US estimates.
China has been widely accused of using detention camps in Xinjiang for forced labour, particularly in the cotton industry.
An investigation by the BBC in 2019 suggested that children in Xinjiang were being systematically separated from their families in an effort to isolate them from their Muslim communities.
Recent research says China has forced Uighur women to be sterilised or fitted with contraceptive devices in an apparent attempt to limit the size of the Uighur population.
China denies this and has accused the media of "cooking up false information on Xinjiang-related issues".