Nationalization is one of the most important epochal events in the history of twentieth-century China. Through the large-scale expropriation of factories, mines, and plants first from the Nationalists in the late 1940s and then from private businesspeople in the early 1950s, the Communist regime transformed the Chinese economy into full state ownership. More importantly, by eliminating capitalists and private business, nationalization laid the ideological foundation of the Communist rule, a legacy that continues to resonate in contemporary China. This talk shifts away from the conventional top-down narrative that portrays nationalization as a transformative political and economic campaign but instead explores its multifaceted ground-level processes and long-term social and legal consequences in the local society. Drawing on newly discovered family letters, factory archives, legal papers, and local government documents, this study provides an in-depth account of how a local iron factory and their private owners passed through the events of nationalization, re-investigation, and compensation between the 1950s and the 1980s. It shows that, despite the rapid takeover of the factory’s machinery and campus, the local cadres, with limited institutional, financial, and knowledge capacities, faced enormous challenges when attempting to destruct the invisible family business networks underlying the factory’s physical property. Not only a one-time political campaign, nationalization as a social reconfiguration effort also resulted in conflicts, negotiations, and compromises involving merchant families, factory cadres, and government officials, which lasted for several decades under Mao and Deng. This study thus reconsiders nationalization from the perspective of state capacity and analyzes its significance in defining China’s family relations, legal institutions, and state-society relations.