The United Steelworkers (USW), the nation's largest industrial trade union, has accused China of propping up its wind and solar industries at the expense of foreign companies and their employees.
China has reacted furiously to the move, accusing the Obama administration of using the probe to win votes.
Speaking at a press conference in Beijing, National Energy Administration director Zhang Guobao said: "Does America want to get fair trade or a genuine dialogue? Or transparent information? I think not - it seems America's main reason is to get votes."
Zhang said the Steelworkers' complaint is groundless. "Chinese subsidies to new energy companies are much smaller than those of the US government," he said.
It is apparently unusual for Zhang to call a press conference at short notice, a measure of the issue's seriousness.
The original complaint, filed by the Steelworkers on September 9, said that China has used hundreds of billions of dollars in subsidies, performance requirements, preferential practices and other allegedly illegal activities to "cheat" and advance its domination of the fast-growing green energy sector.
If true this would be a violation of the rules of the World Trade Organisation (WTO), of which China is a member.
The petition alleges that because of this behaviour, China is the top contributor to the US's trade deficit in the green energy sector.
The USTR's office said that it would complete its probe within 90 days. It could then pursue China legally through the WTO.
"This is a vitally important sector for the United States," said Ron Kirk, the USTR. "Green technology will be an engine for the jobs of the future, and the [Obama] administration is committed to ensuring a level playing field for American workers, businesses and green technology entrepreneurs," he said.
Kirk said his office is taking the union's claims "very seriously," adding, "We are vigorously investigating them."
