The cut, which will take effect on Monday, is the country's first since 2008.
China's Ministry of Finance and its State Taxation Administration said in a joint statement the move was designed to "invigorate the capital market and boost investor confidence".
Chinese markets have eagerly awaited the reduction of the duty from its current rate of 0.1 percent after being shaken by slower-than-expected growth figures, as well as a property debt crisis, weak consumption and record youth unemployment.
The CSI 300 index of the top stocks traded on the Shanghai and Shenzhen exchanges has fallen by around four percent so far this year, following two consecutive years of declines, according to Bloomberg.
The fall can be partly blamed on China's slowing economic recovery following the Covid pandemic.
The stamp duty cut is expected to generate large transactions when trading resumes on Monday.
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