Chinese society has witnessed numerous incidents of civil disputes in recent years. In the face of an exponential increase in disputes, the Chinese government has invested a great amount resources in dispute resolution, including mediation. State-initiated mediation has indeed helped addressed some of the civil disputes. However, it may not be necessarily effective or fair. Using the case of state mediation on divorce disputes, this study explains why state mediation may not be fairly carried out and why such unfair mediation can be accepted by disputants. It finds that state mediation fails to safeguard justice or fairness because of the disparate priorities and interests among different actors involved in the divorce process: the disputing couple, the mediator, the judge, and the court. State mediators and the court system prioritize mediation over fairness because of the pressure of performance. Because of their advantages, mediators can use soft coercion to command disputants’ compromise and acceptance of the mediation. The case of mediation of divorce disputes reveals how state priorities may distort dispute resolution.