Teacher appraisal has been widely practised in China for decades. With the introduction, in 2009, of the teacher performance pay system, however, teacher appraisal has undergone certain changes. This study explores the practice of teacher appraisal, using a qualitative approach and taking public schools in Shanghai as its research sites. The methods adopted include interviews with teachers and school administrators, observation of relevant activities and document analysis. The study reveals that teacher appraisal in schools in Shanghai is not a one-off event. Although the procedure for generating appraisal results occurs at the end of each year, data collection activities for appraisal – including lesson observation, student evaluation of teachers and checking teachers’ tasks – are conducted throughout the whole year. The current teacher appraisal system has been a success, and this study identifies four factors contributing to that success. First, administrative and developmental appraisal coexist as one single appraisal system. Second, teacher appraisal is integrated with other aspects of schools’ business. Third, teacher appraisal is perceived by teachers as credible and fair. Fourth, non-technical aspects of appraisal, such as teachers’ psychology and social dynamics, are taken into account during the appraisal process.