State media say 192 criminal cases have been filed. Improperly stored or transported vaccines were allegedly sent to 59 health institutions.
The government has said it will tighten procedures around vaccine-handling.
Anger over the scandal is widespread in China, where the alleged illegal vaccine ring had reportedly been in operation since 2011.
In April 2015 two women were arrested for selling some $88m (Â£61m) worth of vaccines.
Details were only made public last month, when the authorities issued a call demanding that suppliers come forward to help them trace potential victims.
China's State Council said 357 officials faced demotion or losing their jobs and that 202 had been detained so far.
Health authorities have also urged people to continue coming forward for vaccinations.
The China office of the World Health Organization (WHO) said vaccines needed to be handled properly or else they could become less effective.
But it stressed that improperly kept vaccines did not in themselves present much danger.
Beijing's decision to punish officials has been welcomed by the Chinese media, with one paper saying the credibility of the authorities is at stake. "There have been reports that concerned parents have held back their children from being vaccinated, showing that any misstep would cost the government its credibility and further undermine confidence in the public health system," the English-language China Daily says.
Local paper The Beijing News says the decision to file criminal cases has "broken the illusion" that punishment can be dodged. "Lives are at risk," it says. "For the State Council to first announce punishment for 357 people - this is aimed at breaking the wishful thinking among certain officials that they can hide behind other wrongdoers."
State mouthpiece People's Daily shared the news on popular microblog Sina Weibo which received hundreds of comments. But the censors appear to have deleted many of them, leaving only comments from users expressing support for the government. News of the scandal has been heavily filtered on the platform in recent weeks.
The Chinese government has promised to punish 357 officials over a scandal involving the illegal sale of vaccines.