Abstract: A scientific subsidy mechanism ensures the healthy development of bus transit industry,and the effec-tiveness and sustainability of government subsidy.This study reviews the research status,achievements,existing prob-lems and development prospects on the subsidy mechanism of bus transit in China.Firstly,the definition,research focus and challenges on the subsidy mechanism are reviewed.Secondly,the study summarizes the main methods,conclusions and problems on the research rationales,the calculation methods of bus transit subsidies,and the effects of subsidy and subsidy mechanism on bus performances.Finally,the research challenges are summarized and the future research trends and topics are identified including cost measurement method and establishment of subsidy mechanism.