Along with advances in urban state-owned enterprise reform, fast growth of private sector and changes in the wage structure, eings inequality in urban China has been increasing. Using data from the 1988 and 2007 waves of the urban household survey conducted by China Household Income Project, this paper attempts to examine the impact of the change in ownership structure on eings distribution in urban China. We find that developing non-state-owned enterprises (nonSOEs) or privatization of state-owned enterprises (SOEs) enlarge eings inequality, but the difference in eings level between the two sectors is small. Although workers in SOEs receive higher income than in nonSOEs, the difference is more caused by endowment difference rather than coefficient differences. Introducing market power to wage determination system is more influential to the rising eings inequality which leads more rewards on working experience and educational attainment.