The nine-day-old baby in the northern province of Shaanxi died after being injected with "Yinzhihuang," a remedy containing herbal extracts and used to treat liver diseases and infantile jaundice, the official Xinhua news agency said.
Three other infants had suffered "adverse effects" after being injected and hospitals have been told to stop using the drug, the report said, citing the Ministry of Health.
Samples of the drug were being tested, Xinhua added.
Earlier this month, the government recalled another herbal injection whose use has been linked to the deaths of three people.
China recalled two batches of the herbal drug produced by a company based in northeastern Heilongjiang province, after the injections caused strong adverse reactions in six people from southwestern Yunnan province, three of whom died.
Authorities said the problem batches had been tainted with bacteria.
The incidents come on the heels of a scandal over milk adulterated with melamine, which has killed four children, sickened tens of thousands of others and prompted recalls around the world.