Since the founding of the PRC, China’s preschool education investment has gone through three stages, from “scattered” investment based on grass-roots units to market-oriented investment and then to investment dominated by government fund. The condition of investment in each stage is closely related to the economic system of the day and the understanding of the main functions and attributes of preschool education. The sources, structure and mode of investment had their own characteristics in each stage, which had a profound impact on the development of preschool education. The government should define and categorize preschool education in a scientific and comprehensive way. The investment in preschool education should aim at promoting the healthy development of preschool education and both state and private factors should play a part in it.