Abstract: Purpose/Significance China’s social governance policies have been promoted from local innovation to the whole country. The driving force and diffusion mechanism of such policies are not clear, and the research conclusions of other types of policies are not applicable. Design/Methodology Based on the provincial diffusion data of grid management policy from 2000 to 2020, this paper analyzes the micro diffusion driving force and macro diffusion mechanism evolution of social governance policies. Conclusions/Findings Before the central government absorbs a social governance policy, the driving force for local government to adopt it is efficiency logic and normative pressure. After being absorbed by the central government, the driving force for local government to adopt the policy is the bureaucratic pressure brought by the confirmation of central government. The change of driving force makes the policy experience the mechanism evolution of “local innovation—limited horizontal diffusion—deep vertical diffusion”. The research not only provide a reasonable explanation for the driving force and mechanism evolution of social governance policy diffusion, but also clarify the application boundaries of policy diffusion theory to different types of policy diffusion in China’s institution.