The only other Olympic victory for Britain came in the 1948 London Games when after finishing 0-5 in the group, they beat Ireland in a classification game that put them in 20th place.
The lopsided Group B victory came in a clash of winless teams, but it was an emotional triumph for Britain and veterans Robert Archibald and Nate Reinking who were playing their last game for their country.
"I'm extremely proud of the way they played today," Britain coach Chris Finch told reporters. "They came out with fire in their belly to get a win and make a little bit of history.
"Certainly it is what we needed, what the basketball community in general needed."
The victory for 43rd-ranked Britain over number eight China gave the hosts a 1-4 record in Group B and sent the Chinese home at 0-5.
The British team's best known player, Chicago Bulls forward Luol Deng, said getting the win for his long-time team mates meant more to him than anything.
"Seeing Rob (Archibald) crying at the end, it meant a lot to me," said Deng.
Britain were in command from the start, using a 12-0 run to seize a 22-12 lead and never looked back.
Kieron Achara led the team with 16 points as everyone contributed. Reinking scored 12, Archibald had eight points and Deng registered six.
"Hopefully we showed everyone that we have potential," Deng said. "I think the game will be more popular and there will be more attention to it.
"We've come a long way."
Britain had gamely challenged two other strong teams earlier in the tournament, taking Brazil (ranked 13th) and Spain (second) to the wire.
Deng hoped that this taste of Olympic success might lead to more kids taking up the game.
"There's a lot of kids out there spending a lot of time not doing anything," he said. "You never know if by having more facilities and attention to the sport what kids you might interest."
Above all, Deng said his lasting memory of the victory at the Olympic Basketball Arena would be tied to his team mates.
"For Rob and Nate we made history," he said. "To have the last game at the Olympics and go out with a win, I'm extremely excited for those guys."