Billed as "Heaven on Earth", the largest city in eastern China's Zhejiang province follows Chiang Mai routes to Hong Kong and Macau for Thailand's largest low-cost carrier.
With the launch set for Feb 21, TAA will be the first airline offering direct daily flights between Chiang Mai and Hangzhou.
Chief executive Tassapon Bijleveld said the Chiang Mai-Hangzhou route should draw more Chinese visitors to Thailand and prove beneficial once Hangzhou strengthens its status as a centre for tourism, business and transport.
It is also a convenient jumping off point to Shanghai, only a little over an hour away by high-speed train.
Hangzhou is home to the Unesco World Heritage site of Xi Hu, also known as West Lake, and the Lingyin Temple as well as the shopping havens Song Dynasty City Replica and Qinghefang Ancient Street.
Mr Tassapon said AirAsia Group is trying to promote Chiang Mai as internationally important by increasing its frequency of flights and continually adding new routes to the city. Chiang Mai is already a hub for the carrier.
The airline operates 12 flights a day from Chiang Mai to Bangkok, two a day to Phuket, Hat Yai and Kuala Lumpur and once daily service to Krabi, Macau and Hong Kong.
TAA's promotional fare on the Chiang Mai-Hangzhou route starts at 1,990 baht one-way including fuel surcharge and airport tax, available until next Sunday for travel between Feb 21, 2014 and Jan 31, 2015 at Airasia.com.