"Recently, the government of Canada, through the work of the Communications Security Establishment, detected and confirmed a cyber intrusion on the IT infrastructure of the National Research Council of Canada by a highly sophisticated Chinese state-sponsored actor," said a government statement.
The NRC's computers, Ottawa went on to say, have been isolated from the broader Canadian government network "as a precautionary measure."
New security infrastructure is also being built to try to prevent future breaches, but that could take up to a year to complete, it added.
China cyber espionage has become a growing concern for many governments and companies, following several reports of breaches in recent years.
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Hackers using servers traced to China previously penetrated computer systems at Canada's Finance Department and Treasury Board.
China has always denied any hacking involvement.
A 19-year-old Canadian man was also arrested in April for allegedly stealing 900 Canadian taxpayers' data, which was made vulnerable by the "Heartbleed" bug.