"First, we want a peaceful resolution of all disputes. To that end, there should be an immediate and lasting halt to land reclamation by all claimants," Carter said at the annual Shangri-La Dialogue on security with a high-level Chinese military delegation attending.
"We also oppose any further militarization of disputed features," he said.
He acknowledged that other claimants have developed outposts of differing scope and degree, including Vietnam with 48, the Philippines with eight, Malaysia with five and Taiwan with one.
"Yet, one country has gone much farther and much faster than any other.
"And that's China. China has reclaimed over 2,000 acres, more than all other claimants combined and more than in the entire history of the region. And China did so in only the last 18 months," Carter said.
- Chinese actions 'reasonable and justified' -
In comments during a question and answer session after Carter's speech, a Chinese military official said his criticism was "groundless and not constructive".
"Freedom of navigation in the South China Sea is not at all an issue because the freedom has never been affected," said Senior Colonel Zhao Xiaozhuo from China's Academy of Military Science.
"I think China's activities are legitimate, reasonable and justified," Zhao added.
Chinese delegation head Admiral Sun Jianguo, deputy chief of the general staff department at the People's Liberation Army, is scheduled to address the forum on Sunday.
"There should be no mistake: the United States will fly, sail, and operate wherever international law allows, as US forces do all around the world," Carter said in Singapore.
"America, alongside its allies and partners in the regional architecture, will not be deterred from exercising these rights -– the rights of all nations. After all, turning an underwater rock into an airfield simply does not afford the rights of sovereignty or permit restrictions on international air or maritime transit."
Beijing has accused Washington of singling out China over an activity that other countries in the region are also engaged in.
China insists it has sovereignty over nearly all of the South China Sea, a major global shipping route believed to be home to oil and gas reserves.
- Code of conduct -
In his speech, Carter urged China and the 10-member Association of Southeast Asian Nations to adopt a "code of conduct" in the disputed waters this year.
The code is expected to build on a non-binding 2002 pledge by countries with competing claims to respect freedom of navigation, resolve disputes peacefully and refrain from inflaming the situation.
ASEAN members the Philippines, Vietnam, Malaysia and Brunei claim parts of the sea, along with Taiwan.
Washington on Friday accused China of deploying two artillery pieces on one of its artificial islands in the South China Sea, calling it an unprecedented move that suggests Beijing is trying to extend its military reach in the contested waters.
The heavy weapons, since removed, posed no security threat but their positioning -- within range of territory claimed by Vietnam -- underscored Washington's concerns that China is pursuing a massive island-building project for military purposes, US officials said.
Carter said Washington "will support the right of claimants to pursue international legal arbitration and other peaceful means to resolve these disputes."
The Philippines infuriated China when it filed a formal complaint to the Permanent Court of Arbitration at The Hague in March 2014. China has so far refused to recognize the process.