Up to 20 CIA informants were killed or imprisoned by the Chinese government between 2010 and 2012, damaging US information-gathering in the country for years, the New York Times reports.
It is not clear whether the CIA was hacked or whether a mole helped the Chinese to identify the agents, officials told the newspaper.
They said one of the informants was shot in the courtyard of a government building as a warning to others.
The CIA have not commented on the report.
Four former CIA officials spoke to the paper, telling it that information from sources deep inside the Chinese government bureaucracy started to dry up in 2010.
Informants began to disappear in early 2011.
The CIA and FBI teamed up to investigate in an operation one source said was codenamed Honey Badger.
The paper said this investigation had centred on one former CIA operative but there was not enough evidence to arrest him. He now lives in another Asian country.
Matt Apuzzo, a New York Times journalist who worked on the story, said "one of the really troubling things about this is that we still don't know what happened.
"There's a divide within the American government over whether there was a mole inside the CIA or whether this was a tradecraft problem, that the CIA agents got sloppy and got discovered, or whether the Chinese managed to hack communications."
The disappearance of so many spies damaged a network it had taken years to build up, the paper reports, and hampered operations for years afterwards, even prompting questions from within the Obama administration as to why intelligence had slowed.
Officials said it was one of the worst security breaches of recent years.
By 2013, the Chinese government seemed to have lost its ability to identify US agents and the CIA moved back to trying to rebuild its network.
"For many years China and the US have been locked in this spy battle that's been going on behind the scenes," Mr Apuzzo said.
"While doing this story we uncovered that Chinese intelligence have been able to infiltrate an NSA outpost in Taiwan. It goes back and forth."
The story was published during a temporary vacuum at the top of diplomatic relations between the two countries.
The Trump administration has named Terry Branstad, who is the governor of Iowa, as its ambassador to China but he has not yet moved to Beijing.
Cui Tiankai, China's ambassador to the US, has not commented, but in a recent press release, he mentioned "the current positive momentum that the China-US relationship enjoys".