Many developing countries have adopted International Financial Reporting Standards (IFRS) to enhance accounting transparency in the international capital market. Since the increased audit efforts and audit risk accompanying mandatory IFRS adoption are widely believed to result in incremental audit fee increases, we focus on the effects of IFRS adoption on audit fees for 404 listed companies in China during 2005.2009. We find that IFRS adoption itself did not increase audit fees significantly. Further, audit fees adjusted based on the Consumer Price Index decreased significantly after IFRS adoption. The growing number of accounting firms has made the Chinese audit market more competitive, and accounting firms are less likely to charge incrementally higher audit fees to compensate for the increasing audit costs accompanying IFRS adoption in this environment. However, Big 4 accounting firms charge an audit fee premium because of their dominant market power and expertise in auditing IFRS-related financial statements. Moreover, the local top 10 accounting companies have started charging audit fee premiums in the post-IFRS adoption period, suggesting that they have gradually attained a leading position in the Chinese audit market owing to the government`s legal support. Contrastingly, state-owned enterprises have paid low audit fees in both the pre- and post-IFRS adoption periods, suggesting that they have less incentive to signal good financial reporting quality, even after IFRS adoption. We posit that if audit fees do not increase with audit costs, audit quality may deteriorate in the long term. Thus, our findings provide various important implications for audit quality.