The Pacific has long been an area for diplomatic competition between China and Taiwan, which Beijing views as its own territory with no right to the trappings of a state.
The democratically ruled island rejects China's sovereignty claims.
Posting on his Facebook page, Papua New Guinea Foreign Minister Justin Tkatchenko said the "physical presence of Chinese Taipei will no longer be recognised or required within the jurisdiction of Papua New Guinea", using the name Taiwan uses for certain international bodies such as APEC.
Tkatchenko said he had told the Chinese ambassador, Yang Xiaoguang, this week of the decision, and that Papua New Guinea viewed this "administrative alignment" as a vital step towards elevating ties.
Taiwan's foreign ministry said the move had not been discussed in advance and it would talk to the Papua New Guinea government.
"Our representative office in Papua New Guinea will continue to operate normally and, in accordance with relevant regulations, safeguard our nation's rights and interests and provide necessary services to our nationals," it said.
The ministry said it had contacted "like-minded countries to seek the international community's attention and support", without giving details.
China's foreign ministry said the move was "highly appreciated" by its government.
The "right decision" to close Taiwan's office would "further consolidate political foundation for the development of China-PNG bilateral relations", China's embassy in Papua New Guinea said.
Papua New Guinea very briefly had diplomatic relations with Taiwan in 1999.
Taiwan has formal diplomatic ties with only three Pacific Islands nations - Palau, Tuvalu and the Marshall Islands - but had maintained a de facto embassy in Papua New Guinea. It also has a similar office in Fiji.
In 2020, a Taiwanese diplomat ended up in hospital in Fiji after two Chinese diplomats stormed into a reception trying to gather information on who was attending.
Only 12 countries maintain formal diplomatic ties with Taiwan.
