The company started testing the vehicles this week, but the Department of Motor Vehicles (DMV) has said the firm must have a test permit.
Uber said it did not need one as they have a safety driver at the wheel, and is going to ignore the demand.
California's attorney general - the state's most senior government lawyer - said Uber must cease the driving immediately or face further action.
A spokeswoman for the attorney general's office would not be drawn on what the specific action could be, but the next step would likely be a court order compelling Uber to carry out the demand.
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| Uber had started to pick up passengers in specially-modified Volvo self-driving cars. Photo: Volvo |
Other companies testing autonomous technology in California, such as Google, have applied for and obtained the permit which costs $150 (£120) for 10 vehicles.
Additional vehicles can be added at a rate of $50 for each additional 10 vehicles.
"It is illegal for the company to operate its self-driving vehicles on public roads until it receives an autonomous vehicle testing permit," said Brian Soublet from the California DMV in a letter to Uber this week.
In a conference call with media on Friday, Uber's vice-president of Advanced Technologies Anthony Levandowski said Uber had "respect" for officials, but that the regulations were irrelevant to its cars.
"You don't need a belt and suspenders if you're wearing a dress," he told reporters.
In his view the permit only applies to cars that could operate "without the active physical control or monitoring of a human operator".
Uber's cars need a human, he said - although the company still intends to refer to the vehicles as "self-driving cars".
