AbstractPrevious studies, mostly analyzing data from high‐income economies, present mixed evidence on the relationship between retirement and healthcare utilization. This study leverages administrative data for over 80,000 urban Chinese workers to explore the effect of retirement on outpatient and inpatient care utilization using a fuzzy regression discontinuity design. The analyses of medical claims from a large city in China complement and extend the current literature by providing evidence of potential mechanisms underlying increased short‐run utilization. In this relatively well‐insured population, annual total healthcare expenditures significantly increase primarily because of more intensive use of outpatient care at retirement, especially at the right tail of the distribution of outpatient visits. This increase in outpatient care appears to stem from a decline in the patient cost‐sharing rate and the reduced opportunity cost of time upon retirement, interacting with supplier‐induced demand, not from any sudden impact on health. We do not find evidence of change in inpatient care at retirement. The results hold for both females and males, and are robust to a number of sensitivity analyses.