The Chinese government said over the weekend that two men, one aged 87 and the other 27, had died after being infected with H7N9 avian influenza -- a sub-type that had not previously been transmitted to humans.
A 35-year-old woman in the eastern province of Anhui, near Shanghai, was also in critical condition after developing the disease in March, the National Health and Family Planning Commission said.
Shanghai's health bureau had ordered hospitals to boost monitoring and supervision of respiratory illness cases, but authorities were unsure how the three became infected, the Shanghai Daily newspaper said on Monday.
The two victims in the city both had histories of chronic illness, said a statement from Shanghai's health bureau, without giving details.
None of their close associates had become infected with H7N9, although two sons of the elderly man both had respiratory illnesses around the same time, one of them dying.
The woman from Anhui had contact with birds, while the younger man in Shanghai worked butchering and selling meat, the state-backed Health News said on its website on Monday, suggesting a route for transmission.
One Chinese expert played down the threat from the new strain.
"So far, it is still an animal virus, not a human virus," the Shanghai Daily quoted Jiang Qingwu, head of the school of public health at Fudan University, as saying.
The more common H5N1 strain of avian influenza has killed more than 360 people globally from 2003 until March 12 this year, according to the World Health Organization (WHO).
The WHO says other sub-types have infected humans, including H7N7 and H9N2, and some of those infections led to deaths.
China reported two deaths from H5N1 in the southwestern province of Guizhou in February, the country's first cases so far this year.
China is considered one of the nations most at risk from bird flu because it has the world's biggest poultry population and many chickens in rural areas are kept close to humans.