Trading on China's stock markets were suspended for the rest of the day, for the second time this week. A similar plunge on Monday triggered the circuit breaker, the first day the mechanism came into effect.
The mechanism follows the Hushen 300 Index, which reflects the performance of bluechips listed in Shanghai and Shenzhen.
When the index rises or falls by five per cent, the circuit breaker imposes a 15-minute suspension in trading. If the Hushen 300 declines by over seven per cent, trading is halted for the day.
In the end, the Hushen 300 Index plunged 7.21 per cent to close at 3,284.74 points.
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The benchmark Shanghai Composite Index was down 7.32 per cent to close at 3,115.89 points. The smaller Shenzhen index lost 8.35 per cent to close at 10745.47 points.
The ChiNext Index, China's NASDAQ-style board of growth enterprises, dropped 8.66 per cent to close at 2,254.52 points, state-run Xinhua news agency reported.
The yuan's central parity rate lost 332 basis points to 6.5646 against the US dollar today, the lowest level since March 18, 2011, data from the China Foreign Exchange Trading System (CFETS) showed.
As of the end of 2015, the CFETS exchange rate composite index, which measures the yuan's strength relative to a basket of 13 foreign currencies, stood at 100.94, up 0.94 per cent from the end of previous year.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
The stock market crashes followed fears sparked by reports this week that the world's second largest economy was headed for further slowdown.