The intermediate-range ballistic missile is also known as the "Guam killer" for its range - 3000km to 5741km - that puts the US island in the western Pacific within striking distance.
It could be used in nuclear, conventional and anti-ship strikes, meaning China could use it to attack US aircraft carriers and naval bases in the Asia-Pacific region.
China's defence ministry in April confirmed the DF-26 had been put into service with the Rocket Force.
Adam Ni, a China researcher at Macquarie University in Sydney, said the latest exercise sent "a clear message to the US about China's growing missile capability, and that it can hold at risk US strategic assets, such as carriers and bases".
"It's an attempt to reinforce the notion that the PLA has the capability to sink US carriers and inflict unacceptable damage on American forces," Ni said.
"Within the context of increasing strategic competition and tension between the two countries, the latest drills are just another signal to the US about the prevails of escalation, including by intervening militarily in support of Taiwan against China - We are likely to see more [of these drills] if bilateral relations worsen."
Footage of the exercise was released just one week after US Admiral John Richardson in Tokyo said the US Navy had not ruled out sending an aircraft carrier through the Taiwan Strait, despite China's military technology advances posing a greater threat to its warships than ever before.
Military tension between the two countries is escalating, with the US sending two warships through the strait on Thursday, and Taiwan saying multiple PLA military jets had also flown near the southern tip of the self-ruled island to the western Pacific for a drill that day.
James Floyd Downes, a lecturer in comparative politics at the Chinese University of Hong Kong, said releasing footage of the missile drill was a calculated political act.
"Beijing is demonstrating its military capacity and overall strength in power," Downes said. "This is arguably a strategic power play and a sign to Washington and the Trump administration of its underlying military power - a key strategy taken directly from the realist playbook in international relations."
Zhang Baohui, a director of the Centre for Asian Pacific Studies at Lingnan University in Hong Kong, said the drill was about deterrence amid rising tensions in the region.
"China has repeatedly stated that the missile can hit moving targets like ships," Zhang said. "While the overall probability of war between the US and China remains very low, Beijing is nonetheless concerned by recent changes in the dynamics of Sino-US relations.
The public debut of the DF-26 could mean enhancing its general deterrence."
- South China Morning Post
