In 30 years’ reform and opening up, China has completed the basic transition to market economy, resulting in tremendous changes in the societal structure. Subsequently, organizations and institutions in basiclevel urban China, especially danwei and the danwei system, have also undergone profound transformation. In the context of institutional market transition, this essay systematically reviews the studies concerning the change of danwei. After defining the concept, the paper dissects the literatures into three parts: (1) the system of danwei and its evolution, (2) the power structure and behavior patterns within danwai, and (3) danwei as a mechanism of social stratification. The authors conclude that, while the method of case study is preferred, future danwei studies should focus on the following three subjects: (1) to investigate the power structure and behavior patterns within different kinds of danwei, (2) to explore the specific micromechanisms of danwei in social stratification, and (3) to understand the new characteristics and functions of the Chinese social organizations with danwei as a reference.