This paper studied empirically cost efficiency and profit efficiency of Chinese commercial banks by the method of SFA and analyze the influence of foreign bank entry by market entry and participation on efficiency of domestic banks.Results show that cost efficiency and profit efficiency do not increase significantly in the early stages of foreign bank entry,even fall to some extent,and begin rising when foreign banks market share expand to a certain level.Participation of foreign banks to domestic banks has significant positive effect on efficiency of domestic banks.Joint-stock banks and state-owned banks have highest and lowest cost efficiency and profit efficiency respectively.