In this study, a new gauge-based analysis of 0.25° daily precipitation data from 756 Chinese stations was constructed using a state-of-the-art gauge data analysis system to evaluate the Tropical Precipitation Measuring Mission (TRMM) Multi-Satellite Precipitation Analysis (TMPA) 3B42 Version 6 product over China during the period of 1998–2010. Tests by withdrawing a fraction of the gauge records from the analysis shows that the gauge data analysis system used in this study has a good performance in constructing daily high-resolution gridded analysis data over China. Analyses reveal that the 3B42-V6 product is capable of describing the observed spatial patterns and seasonal variations for most areas of China during the wet season, as well as the evolution of the summer precipitation belt in the Yangtze River valley. The differences between the satellite product and the gauge analysis of daily precipitation are within ∼10% over most of east China, but the satellite product underestimates the observed precipitation by 20% ∼ 50% for most of western China, especially the western Tibetan Plateau where the underestimates are over 50%. For daily variations of precipitation, the satellite product captures the observed precipitation signals but fails to show the correct magnitude or the timing of precipitation on synoptic or sub-synoptic scales. In addition, this satellite product overestimates the heavy and extreme daily precipitation for some areas of southeastern China but underestimates the light and moderate precipitation over most of northwestern China. Thus, the TRMM 3B42-V6 product should be used cautiously for monitoring droughts and heavy and extreme precipitation for some regions of China. An empirical orthogonal function (EOF) analysis shows that the TRMM product can well depict the spatiotemporal evolution of the observed daily precipitation for most China during the warm season.