Poverty is the common challenge faced by the international community. The human society has never ceased to struggle against poverty. China was once the developing country with the largest rural poor population in the world. Facing the decreasing effect of economic input to poverty reduction, land policy innovations could contribute to promoting poverty alleviation, particularly in China, where the defects in policy making is regarded as a major factor in rural poverty. This study explores the institutional innovation of China’s poverty alleviation since 2013 and further reveals the mechanism behind land policy innovation promoting the targeted poverty alleviation based on a case study of Songjiagou village of Fuping county, Hebei province. We found that the Chinese central government has innovated the mechanism for the TPA to lift the remaining rural poor out of poverty by 2020 as scheduled. Implementing the TPA could confront the labor, capital and land dilemmas. Combined land policy innovations and land engineering with the ex situ poverty alleviation relocation (ESPAR) can help to break the institutional barriers. We argue that land policy innovations and the ESPAR not only contributes to poverty reduction and improve living conditions of the poor, but also needs to guard against its potential risk. These findings can provide policymakers with a sound scientific basis for poverty reduction planning and decisions in China and other poor countries.