AbstractChina has experienced unprecedented economic development and urbanization in the past four decades, which has reshaped the Chinese city's physical and social landscape. This article reviews research on socio‐spatial differentiation and residential inequalities in urban China. The market transition and institutional changes have led to cities with escalating spatial divisions of socioeconomic groups since the 1990s. The legacy of a planned economy, unique socialist institutions, growing social disparities, migration, and globalization are essential mechanisms leading to the changing socio‐spatial structure of Chinese cities. Divided cities foster social inequalities by unevenly distributing opportunities and resources for education, income, health, and social networks, and, in turn, affect individual well‐being. This review concludes by calling for more theoretical development and comparative research in studies of Chinese residential inequalities and offering some suggestions for the field's future direction.