Grenada has promised an inquiry after Taiwan's national anthem was played instead of China's at a ceremony in the Grenadian capital, St George's.
Grenada broke its ties with Taiwan in 2005 in favour of China
The diplomatic gaffe happened during the inauguration of a sports stadium that was paid for by China.
Correspondents say the Chinese envoy to the Caribbean nation was visibly uncomfortable as the Royal Grenada Police Band performed Taiwan's anthem.
"The unfortunate error breaks my heart," Grenada's prime minister said.
"I am very saddened," said Prime Minister Keith Mitchell, promising a detailed inquiry.
Grenada's police have so far made no comments about the incident.
The reconstruction of the St George's Queen's Park stadium - which was destroyed by Hurricane Ivan in 2004 - was financed by Beijing as a gift to Grenada.
The tiny island-nation broke off its diplomatic relationship with Taiwan in 2005 in favour of China.
China regards Taiwan as a renegade province, and wants it to be brought back under Beijing's control.