The United States yesterday confirmed a Chinese warship had picked up a US research drone after it was deployed by the USNS Bowditch in international waters northwest of Subic Bay off the Philippines.
The drone, which the Pentagon said was operating lawfully and was clearly marked as US property, was collecting data about the salinity, temperature and clarity of the water about 50 nautical miles northwest of Subic Bay, off the Philippines.
US officials demanded its return, and lodged a formal diplomatic protest with Beijing.
China's Defence Ministry said its naval vessel was checking a piece of "unidentified equipment" for navigational safety reasons, before discovering it was a US drone.
The Pentagon said China had now agreed to return the drone.
"Through direct engagement with Chinese authorities, we have secured an understanding that the Chinese will return the UUV to the United States," Pentagon spokesman Peter Cook said in a statement.
"China decided to return it to the U.S. side in an appropriate manner, and China and the U.S. have all along been in communication about it," the Chinese foreign ministry said on its website.
China has claimed territorial rights over parts of the region but its claims are disputed. It is not clear if China claims the territory in which the drone was seized.
China accused the US of "hyping-up" the incident and criticised the US, saying it had overreacted.
Hours earlier, US president-elect Donald Trump, in which he accused the Chinese of "stealing" the drone.
"China steals United States Navy research drone in international waters - rips it out of water and takes it to China in unpresidented act," he wrote.
Mr Trump drew criticism online for misspelling the word unprecedented - the latest in a series of errors in his Twitter posts. He has now corrected the entry.
Mr Trump had already inflamed the Chinese by speaking on the phone earlier this month with the leader of Taiwan, breaking a long-standing US practice on the China-Taiwan dispute.
The seizure will likely add to US concerns about the growing military build-up by China in the South China Sea.
A US think tank reported this week that aerial imagery shows that China has installed weaponry along seven artificial islands they have built at sea, despite US protests.