The Chinese flotilla partaking in the drill, which began on Sunday, comprises two battle cruisers, a support vessel, and a helicopter.
It had berthed at the southern Iran port city of Bandar Abbas on Thursday after travelling there from the Pakistani port of Karachi, where it had docked on a training mission.
The Iranian Navy has assigned its Alborz destroyer, a helicopter, and 700 personnel members to the exercise.
China’s Ambassador to Tehran Pang Sen accompanied his country's sailors as they met local officials.
Dozens of Iran-based Chinese national traveled to Bandar Abbas to welcome the servicemen, waving the national flags of the two countries.
The event will conclude later in the day, and the Chinese fleet will then head for the Omani capital of Muscat. Earlier, the Chinese personnel visited tourist spots across the Iranian port city.
Last time a Chinese Navy flotilla arrived in the southern Iranian coast was three years ago. A high-ranking naval delegation from China visited Iran for talks in October 2015.
Subsequently, Iran’s Navy Commander Rear Admiral Habibollah Sayyari visited China’s eastern port city of Qingdao with a high-ranking team and held talks with military officials.
The Iranian Navy dispatched a naval group to China back in 2012, setting a new precedence in the countries’ bilateral naval cooperation.