The Chinese Football Association (CFA) was now an independent organisation with full power to hire staff, set pay rates, organise foreign tours and select coaches, the official Xinhua news agency said.
China's football performance has never matched its vast population nor its economic clout, and the national men's team currently ranks 93rd in the world and 11th in Asia.
The changes are part of a reform plan issued by the State Council, or cabinet, last March and backed by Chinese President Xi Jinping, a football fan who wants to host the World Cup finals one day.
Xinhua cited an earlier government statement saying that China must overcome its "defective system", which has impeded the development of the game.
The government made the changes by "removing" the Chinese Football Administrative Centre, which had controlled the game, Xinhua said. It did not go into details about what it meant by removal.
The ministry-level General Administration of Sport announced last year it was releasing its grip on the CFA by shuffling government officials out and turning the body into a "full-fledged" non-governmental organisation without state funding.
Chinese football clubs have gone on a spending spree to secure top Europe-based talent, though some critics have argued the trend will do little to benefit the players or the game in China.
(Reporting by Michael Martina; Editing by Andrew Heavens)
