The firm raised $1.1bn (?708m) in its latest round of funding, giving it a valuation of $45bn, which surpassed the $40bn value of taxi booking app Uber.
It has quickly risen to the ranks of the world's biggest smartphone makers, behind Samsung and Apple in sales.
The company is also set to unveil a new flagship device in January.
Xiaomi's investors include private equity funds All-Stars Investment, DST Global, Hopu Investment Management, Yunfeng Capital, and Singapore sovereign wealth fund GIC, said co-founder and president Bin Lin in a Facebook post.
"This is an affirmation of Xiaomi's stellar results in four years, and heralds a new phase for the company," Mr Bin said.On the fast track
Xiaomi's strategy of producing cheap smartphones has catapulted its growth to overtake giant Samsung this year in sales in the world's second largest economy China.
The company's worth is now more than quadruple the $10bn valuation it received during its last financing round last year.
Its skyrocketing valuation comes despite the intellectual property challenges it faced earlier this month in India, where sales were temporarily halted after Swedish firm Ericsson filed a patent complaint.
The Beijing-based company has set a target of selling 60 million smartphones this year, up from less than 20 million in 2013.