In contrast to the mortality dynamics of the former socialist economies of Europe during their transition era, few studies have examined mortality changes in China since the start of its socialist economic reforms. This article examines mortality trends of Shanghai permanent residents during the transition from planned socialism to state capitalism. The previously steady improvement in life expectancy slowed down between 1992 and 1996. Mortality among young working-age men (ages 20-44) increased, largely due to rising cardiovascular disease and injuries. Transportation deaths increased but not mortality from suicide or liver disease. These unfavourable mortality patterns are linked to reform-associated institutional changes such as weaker social protection, increased unemployment, psychological stress, unsafe transport and hazardous environments. However, the unfavourable effects were moderate and transient due to gradualist reform strategies and strong institutions combined with rapid economic growth. The lessons learned from the Shanghai experience may be useful for other socialist countries wishing to shift to a market economy.