The Karuma Hydropower Project (KHP), constructed by Sinohydro Corporation, sharply raises Uganda's generation capacity to slightly above 2000 MW.
Construction of the plant, which began in 2013, was delayed for several years and missed multiple completion targets.
At the commissioning ceremony in Kiryandogo in northern Uganda, Chinese Ambassador Zhang Lizhong described the plant as a "flagship project of China-Uganda cooperation."
He said the plant would "connect millions of households with affordable electricity ... and contribute to sustainable clean energy for east African development."
Uganda exports electricity to neighbours Rwanda, Tanzania and Kenya.
A 400 kV transmission line spanning 248 kilometres (154 miles) to carry the power was also launched on Thursday.
Plans are also underway to construct a $180 million transmission line to allow Uganda to export power to energy starved South Sudan.
Energy Minister Ruth Nankabirwa said the plant had faced many logistical challenges including COVID-19 that delayed its completion.
China's Exim Bank provided a $1.4 billion loan, accounting for 85% of the project's cost, while the government provided the remaining funding.
President Yoweri Museveni said his government aimed to ensure access to "cheap, reliable, affordable electricity."
Karuma is the second hydropower power plant China has financed in Uganda in recent years.
In 2019, Uganda commissioned the 188 MW, $500 million Isimba hydropower dam, also on the Nile river, financed with a loan from China. It was constructed by China's China International Water and Electric Corporation (CWE).
