Authorities in the city also charged dozens of Chinese security officials over a campaign to monitor and harass US-based dissidents, AFP reported.
"China firmly opposes the US side's slandering, smearing, engaging in political manipulation, and maliciously concocting the so-called transnational repression narrative," Foreign Ministry spokesman Wang Wenbin told reporters.
"We urge the US to immediately reflect on itself, abandon Cold War thinking and ideological biases, immediately stop related erroneous practices, stop political manipulation, and stop smear attacks against China," he added.
The arrests of Harry Lu Jianwang, 61, and Chen Jinping, 59, are the first anywhere over a suspected campaign by China to establish surreptitious police posts in countries around the world, said Breon Peace, the top federal prosecutor in Brooklyn.
The two men set up the office in Manhattan's Chinatown last year at the behest of the Fuzhou branch of the Ministry of Public Security (MPS), China's national police force, ostensibly to offer services like Chinese driver's licence renewal, according to Peace.
But in fact their main job was to help track down and harass fugitive dissidents from the People's Republic of China (PRC), US officials claimed.
"The MPS established a concrete outpost, an off-the-books police station right here in New York City, to monitor and intimidate dissidents and other critics of the PRC within one of the United States' most vibrant diaspora communities," said David Newman, the Justice Department's principal deputy assistant attorney general for national security.
Canada and several European governments have cracked down on similar unofficial police stations.
Last year the Spain-based human rights group Safeguard Defenders first revealed the existence of such outposts around the world.
They often operate with little or no indication they are there – though US officials said the Manhattan office had been visited by officials from the Chinese consulate in New York.
According to Safeguard Defenders, the "police stations" have been involved in pressuring Chinese nationals to return home to face criminal charges.
Canada has identified and closed several unofficial outposts in Montreal and elsewhere.
Lu and Chen were charged with acting as unregistered agents of a foreign government and obstruction for destroying evidence of their communications with Chinese officials.