The office, to be headed by Twitter executive Peter Greenberger, will allow the San Francisco-based company to tap China for advertising revenue, the company said, even if Internet users on the mainland cannot see those ads.
Twitter collected $479 million in fourth-quarter revenue from advertisers who paid to inject their ads, known as 'promoted tweets', into Twitter users' timelines.
The company has 288 million users worldwide.
China's censors have blocked Twitter's microblog since 2009 along with US social media platform Facebook Inc and Google Inc's YouTube.
Beijing officials say this censorship is necessary to maintain social order.
Twitter was credited with helping fuel the popular uprisings in the Middle East and has maintained a stridently pro-free speech stance to the extent that it has attracted international criticism for failing to police sexist and racist abuse.
Despite the ban, Chinese companies including Huawei Technologies Co Ltd and the state-owned Xinhua news agency use Twitter's microblogging service to reach a global audience.
Last year, the company downplayed suggestions it would seek to enter China, citing political hurdles.
Image: Men are silhouetted against a video screen with a Twitter logo. Photograph: Dado Ruvic/Reuters
Twitter appoints Taranjeet Singh to head India business
Twitter makes first Indian acquisition with startup ZipDial
Twitter accounts for only 17% of Indian social network users
Follow your favourite business tycoons on Twitter
Subrata Roy's get-out-of-jail deal is mired in mystery