In recent years China has witnessed a surge in medical disputes, including many widely reported violent riots, attacks, and protests in hospitals. This is the result of a confluence of inappropriate incentives in the health system, the consequent distorted behaviors of physicians, mounting social distrust of the medical profession, and institutional failures of the legal framework. The detrimental effects of the damaged doctor–patient relationship have begun to emerge, calling for rigorous study and serious policy intervention. Using a sequential exploratory design, this article seeks to explain medical disputes in Chinese public hospitals with primary data collected from Shenzhen City. The analysis finds that medical disputes of various forms are disturbingly widespread and reveals that inappropriate internal incentives in hospitals and the heavy workload of physicians undermine the quality of clinical encounters, which easily triggers disputes. Empirically, a heavy workload is associated with a larger number of disputes. A greater number of disputes are associated with higher-level hospitals, which can afford larger financial settlements. The resolution of disputes via the legal channel appears to be unpopular. This article argues that restoring a healthy doctor–patient relationship is no less important than other institutional aspects of health care reform. Copyright © 2016 Cambridge University Press.