Abstract: Different from the reform background of the western countries which mainl deal with crises of social welfare states, increase government efficiency and alleviate financial burdens, the Chinese government, from 1990s, started to pursue public service contracting-out in many fields of public service in the background of initiating people's livelihood finance, transforming government functions and stimulating the vigor of market and social institutions. In order to demonstrate the implementation of public service contracting-out in China, the paper firstly proposes that the theoretical logic of contracting-out is to replace hierarchical governance with contract governance. Next, the paper analyzes the realistic reasons of local governments pursuing contracting out in China for various reasons such as economic, political, social and management ones. Lastly the paper discusses the implementation of public service contracting-out in the aspects of what to contract out, who to get the contract, how to contract out and what effects of contracting-out.