The United States says it was "provocative" for China to move an oil rig to an area of the South China Sea also claimed by Vietnam.
The decision to relocate the oil rig underscores China's growing boldness in staking its claims to disputed areas of the South China Sea.
State Department spokeswoman Jen Psaki said at a regular briefing Tuesday the move is "unhelpful" and will further raise regional tensions.
"Given the recent history of tensions in the South China Sea, China's decision to operate its oil rig in disputed waters is provocative and unhelpful to the maintenance of peace and stability in the region. These events point to the need for claimants to verify their claims in accordance with international law and reach agreements about what types of activities should be permissible within disputed areas," said Psaki.
The deep-sea rig is only 220 kilometers from Vietnam's shores, well within the area Hanoi claims as its exclusive economic zone.
Vietnam's foreign ministry says it is "resolutely opposed" to the drilling. It has demanded the rig, which is surrounded by military vessels, be removed.
China, meanwhile, says the drilling platform is in an area under Chinese sovereignty and says it should not be "harassed" by Vietnamese authorities.
The HD-981 rig belongs to the China National Offshore Oil Corporation, the country's third largest national oil company. It had been drilling near Hong Kong.
The Maritime Safety Administration of China on Monday warned all vessels to stay at least five kilometers away from the rig.
In addition to Vietnam, Brunei, Malaysia, the Philippines and Taiwan also have territorial disputes with Beijing in the oil-rich and strategic South China Sea.
The rival claimants accuse China of using increasingly aggressive tactics to defends its territory. China claims almost the entire area based on ancient maps.