The remains of the animal, thought to have weighed 1400 kilograms, was discovered by Professor Xing Xu, from Chinese Academy of Sciences, Mongolia's Erlian basin, an area rich with fossils.
The new species, named Gigantoraptor erlianensis, is the biggest bird-like dinosaur ever found and at a height of 5 metres is about the size of the famous Tyrannosaurus rex, Xing says.
The 85 million-year-old creature was 35 times heavier than other known similar species, and is thought to have had a beak and sporadic patches of feathers, according to a paper in today's issue of the journal Nature.
Through analysing its skeleton, the researchers believe the Gigantoraptor shared the same ancestor and belonged to the same family as the Oviraptor.
With a beak and feathers, the Oviraptor is also bird-like and flightless, but weighed a mere 1-2 kilograms.
The largest known feathered animal before the Chinese discovery was the half-tonne Stirton's Thunder Bird, which lived in Australia more than 6 million years ago.
"If you saw a mouse as big as a pig you would be very surprised; it is the same when we found the Gigantoraptor," Xing says.
"The new dinosaur is much larger than its relatives of the similar species. We have spent a year to confirm its features and characteristics."
The find may contradict an evolutionary theory that says as carnivorous dinosaurs got smaller they became more bird-like, the Nature paper says.
Xing discovered the first femur of the Gigantoraptor in 2005 during the shooting of a documentary about one of his previous finds.
The crew asked him to demonstrate how he finds fossils and during the shot, he chanced upon a section of the femur, or thigh bone.
"We initially thought it was from the same species as we had discovered before, but minutes later we realised it was from a meat-eating dinosaur.
"This big size is very unusual for a meat-eater and only a Tyrannosaur is of similar size."
Xing's team then embarked on further digs that uncovered an extensive collection of bones, followed by a lengthy verification process, leading to the release of the latest paper.
The findings suggest the huge 11-year-old dinosaur was only partly grown.
Xing is one of the world's leading fossil hunters and has discovered more than 20 new species at various sites across China.
In 2001 he was embroiled in controversy over the discovery of a fossil believed to be the 'missing link between dinosaurs and birds, which tests revealed to be a clever fraud.
Xing authenticated the find in 1999, but was also part of the team that began expressing doubts a few months later after he found that the tail on fossils were suspiciously similar to those of a different species.
Forensic scanning found that the fossil, which had been sold to unwitting US collectors by Chinese traffickers, was simply a thin stone slab coated with grout and glued to a jigsaw of 88 fragments of rocks and fossilised bones.