To better face the challenges of rapid urbanisation, it is recommended urban heritage management is carried out through community participation. In the Chinese context of state centralisation, however, inclusive participatory governance for urban heritage has remained limited, and effective ways of engaging residents in decision-making have yet to be explored adequately. This paper aims to explore community participation within Chinese urban heritage management, taking the Old Town of Lijiang as a case study. During fieldwork, in-depth semi-structured interviews were carried out with both native and migrant residents as well as administrators. Based on a community participation assessment framework, the interview guide was developed and then built on four aspects: community participation in decision-making; the competence of participants; the right to social justice and confidence of participants; and community empowerment and equity. This paper reveals the current state of participatory practices in the Old Town of Lijiang and, specifically, discusses the roles of residents, elites and community-based organisations in decision-making concerning urban heritage management, in the contexts of state-centralisation. Chinese urban heritage management needs to raise public awareness and willingness as well as give residents more responsibilities and power to face the challenges of rapid urbanisation, but currently, the degree of participation is still minimal, only between informing and consulting.