This paper studies the roles of the new-style PRH (public rental housing) programme in Shanghai’s socio-spatial dynamics. It shows that the development of PRH in Shanghai is mainly a result of a deliberate urban development policy in line with other strategies such as city marketing and gentrification. The analysis is augmented with data from a questionnaire survey of PRH tenants in Shanghai. Finally, this paper identifies challenges for the future development of the public rental housing sector in China.