Prefabrication is a technology that can reduce the material consumption during the construction process. Thus, it is regarded as a technology that be of assistance in the pursuit of sustainable development in the construction industry. In China, a series of policies has been formulated to promote the implementation of prefabrication; however, the effectiveness of these policies has not been investigated. The aim of this paper is to evaluate the effectiveness of the current prefabrication incentive policies in China. To achieve this research aim, a policy framework was first developed in order to understand the existing policies. Then, four indicators—namely, the number of prefabricated component production enterprises, the prefabricated floor area, the prefabricated building market size, and the expected prefabricated building area ratio—were selected to evaluate each policy’s effectiveness. It was found that the growth rates of these four indicators had increased slowly, and had even shown declining trends before 2015; however, with the incentive policies promulgated after 2015, the growth rates have increased. This study is of value not only in helping readers to understand the existing framework of incentive policies in China, but also in revealing the effectiveness of the identified prefabrication incentive policies. These research findings can also provide insights useful for policy formulation in other jurisdictions for the promotion of prefabrication.