For almost three decades, China has been undergoing significant transition from a planned economy to a market economy. Fast-paced economic growth and urbanization, interacting with market-oriented reforms in land resources allocation, have caused profound spatial restructuring of Chinese cities. This paper examines urban expansion and land use reconfiguration in Shanghai’s central city from 1979 to 2002, with a special focus on the effect of the adoption of the land-leasing system in 1988. The empirical research, which employs GIS-based spatial analysis techniques to explore land use data for multiple years, indicates fundamental changes in the spatial characteristics of urban development in Shanghai after this important land policy reform.