The benchmark Shanghai Composite Index closed at 1,152.534 points, its loftiest close since April 29 when it finished at 1,159.146. The market has now ended in positive territory for six of the past seven sessions.
Analysts expected the rally to last as funds, cheered by the yuan revaluation, built positions. But they foresaw sporadic losses as investors struggled with a potential deluge of shares because of a government program to convert nontraded government-owned stock into freely floated paper.
"The market had begun to turn bullish since the currency revaluation, but there should be corrections on the way up," said Zhuang Qianhua with Huatai Securities.
China revalued the domestic currency by 2.1 percent last month in a move seen as boosting corporate buying power and domestic consumption in the long run.
Sinopec, the most actively traded stock of the day, surged 3.7 percent to 4.50 yuan, extending a 2.4 percent gain Monday.
The benchmark index is still down nearly 9 percent so far this year, dragged down by an unpopular program to sell more than US$200 billion of untraded State holdings in listed firms.
The market had slid 15 percent last year to become the world's worst-performing major index, battered by economic cooling measures and a crackdown on corruption.