The Chinese State Administration for Market Regulation slapped Changan Ford with a fine of 162.8 million yuan ($ 23.6 million) for setting minimum resale prices on its cars in the city of Chongqing, according to a statement published on Wednesday in the regulator website.
Changan Ford's actions deprived distributors of price autonomy, restricted competition and damaged the legitimate interests of consumers, the regulator said.
Ford said it "respects" the decision of the market regulator.
"Changan Ford has taken corrective action in its regional sales management along with its dealers," a Ford spokesman said in a statement.
"As an ethical company, Ford is committed to complying with local laws and regulations wherever we do business," the spokesperson added.
The movement in a famous American automaker comes at a tense moment in relations between the United States and China.
The escalation of the trade war between the two countries and the punitive tit-for-tat actions have sent shivers through the global economy and has shaken investors.
The penalty also occurs when Ford is trying to recover the lost ground in China.
The automaker announced in April that it plans to launch more than 30 new Ford and Lincoln vehicles in China over the next three years as it attempts to reverse a decline in sales in the world's largest auto market.
Serenitie Wang contributed to this report.