In China, Bt-cotton varieties have been marketed since 1997 to help control attacks of some cotton pests, notably Helicoverpa armigera. It is estimated that Bt-cotton is currently grown on about 70% of the total Chinese cotton-growing area. Most studies have explained this broad distribution by the specific advantages of Bt-cotton, particularly the reduction in pesticide use but this has been questioned by some recent papers, which also raised the issue of seed prices. In our study, which is based on datasets seldom used in earlier analyses, we argue that Bt-cotton use in China has been influenced by the development of the cotton variety market. Bt-cotton adoption has benefited from the development of the variety market facilitated by a favorable legal framework since the mid-1990s. Yet, quality uncertainties and high seed prices threaten the profitability and continued use of Bt-cotton as well as development of the variety market. A quality seed subsidy policy was launched in 2007 to rectify the disorder in the variety and seed market, but the effectiveness of this regulation measure is debatable.