Abstract By focusing on the tobacco leaf procurement, this article aims to explore the operation and development of the Chinese tobacco state monopoly system, based on the planned economy mode, in the transition economy since establishment circa 1982. In terms of the monopoly institutional regulations, only the China National Tobacco Corporation (CNTC) can legitimately buy tobacco leaves from peasant households by signing the procurement contracts according to the mandatory plan. However, the real practices of tobacco cultivation and procurement did not comply with the mandatory plan until the serious overproduction of tobacco leaves exploded in 1997. Therefore, there are two main research threads presented here: the first is to discuss the interaction between market reform and planned economy throughout the changes before and after the overproduction in 1997, which paradoxically demonstrates that the tobacco planned economy has strengthened with deepening reform of market economy. The second is to analyze the institutional arrangements of fulfilling the planned production and procurement on flue-cured tobacco since 1998; that is, the tobacco corporation has been driving the local governments to implement the tobacco work by taking advantage of the weakening financial capacity in the rural areas. By probing the aforementioned arguments, this article aims to present another prospective to China’s economic reform.