Many countries have implemented free early childhood education to solve the affordability and accessibility problems without considering the sustainability of policy; thus, they have to discontinue the policy. The city of Nanjing, China, is no exception. This case study adopted a mixed-methods approach to understanding how and why the policy was formulated, implemented, and failed in the city, using the “policy cycle” framework. Altogether 232 kindergarten principals and teaching/research staff were randomly sampled and surveyed, and 5 kindergarten principals and 5 teaching/researcher staff were interviewed. The results indicated that there were many obstacles to the policy’s sustainability, including the conflict of interest, the inefficient policy implementation, the insufficient funding, and more social inequality issues. And the policymakers made mistakes in the five domains of the policy cycle: the context of influence, the context of policy text production, the context of practice, the context of outcomes, and the context of political strategy. Finally, the lessons for a more sustainable policy decision process are discussed.