The drills in China's southwest province of Yunnan, codenamed 'Hand by Hand 2007' involve 100 troops from each side, who will train in countering "three evils" - terrorism, extremism and separatism. The exercises will run until December 27.
"This is a historic, extremely important event," the Indian general in command of the troops dispatched to China said ahead of the drills. "Indian troops will for the first time take part in a joint exercise with units of the Chinese People's Liberation Army."
Chinese military experts hailed the drills as being of "special importance for building mutual trust and understanding, especially given that the two countries have had some fairly unpleasant incidents in the past."
A memorandum of understanding on joint drills was signed in 2006, but it took Beijing and New Delhi several months to finally agree on the date and venue of the first exercise, due to new tensions in relations.
In late May, India cancelled its delegation's visit to China after the Chinese Embassy refused to issue a visa to an official from India's northeastern state of Arunachal Pradesh, to which China has territorial claims.
An armed conflict over a disputed region on the Himalayan border in Arunachal Pradesh, which China calls South Tibet, broke out in 1962. The conflict eventually widened to include the region of Aksai Chin, which Beijing regarded as a strategic link between the Chinese-administered territories of Tibet and Xinjiang. The war ended when the Chinese captured both disputed areas and unilaterally declared a ceasefire on November 20 of the same year.
China and India have since signed several accords, but the status of several areas, including in Kashmir and Arunachal Pradesh, remains contentious.
The countries are both nuclear powers - China announced its first atom bomb test in 1964, and India in 1974.