In 1950, China’s new Communist government created hereditary family class labels intended to promote the advancement of households supportive of the Communist movement along with the economically disadvantaged and to penalize property owners and those associated with the old regime. Researchers have long suspected that the labels rewarded connections to the Communist movement more than the economically disadvantaged, while former middle- and upper-class households continued to enjoy certain advantages. The long-term impact of these labels has yet to be firmly established. The authors examine the factors affecting the initial assignment of class labels and their subsequent consequences for Communist Party membership and educational and occupational attainment. Using data from a 1996 national probability sample survey of China, the authors find that the class labels had a major impact on the life chances of individuals that persisted at least into the mid-1990s, although not always in the ways that were intended.