Class mobility refers to the change of individual’s relative rank in a hierarchical society. Upward class mobility is widely believed to bring benefit to both individuals and societies. However, recent research has evidenced that upward class mobility has negative effects as well. In this review, we focus on the “double-edged sword” (i.e., both positive and negative) effect of class mobility and its psychological mechanisms on individual and society. At the individual level, people (especially for those lower-class members) would experience the cost of health and subjective well-being as a result of upward mobility. The acculturation thesis and dissociative thesis concerned and explained the positive and negative effect of upward class mobility, respectively. However, the status-based identity framework provided an integrated view for explaining the “double-edged sword” effect of class mobility. Specifically, upward class mobility would generate status-based identity uncertainties, which are circumstances that lead people to question and feel uncertain about their own identities. This kind of identity challenges would harm health and subjective well-being of individuals. At the societal level, the experience and perception of upward class mobility would lead people to underestimate and even tolerate social inequality, as well as be less likely to support redistribution policies. The societal effect of class mobility can be explained with internal attribution for the rich-poor gap as well as system justification belief. Specifically, when perceived higher class mobility, people may have greater tendency to internal attribution rather than external attribution of unequal wealth redistribution, which would lead people to less support redistribution policies. In addition, class mobility belief has also been conceptualized as a system-justifying ideology due to its focus on procedural fairness, that is, people believe that they are able to move up or down in a social hierarchy. Thus, class mobility perception is associated with more tolerance of social inequality and lower redistribution preferences. The study of class mobility and its influence is in the ascendant, and there are many points for further study. Firstly, the performance of class mobility perception in China should be clarified. As a result of increasing social inequality, people’s perception of class mobility may be threatened. In addition, methods of class mobility measures remains a matter of some debate, thus further research is needed to investigate the applicability of such measurement methods in China while improving the measurement methods. Secondly, future study should also focus on other psychological mechanisms of the effect of class mobility. For instance, we argue that class mobility would increase individual’s competitive and individualism preferences, which would lead to more self-interested motivations. Consequently, the competitive preference aroused by class mobility would be associated with more social isolation, as well as less support of redistribution policies. Lastly, future study should also explore interventions that could minimize the negative effects of class mobility. For example, a coherent and evolved status-based identity can be established with identity-based interventions, which can support individual’s health and well-being. Furthermore, some strategies (e.g., inequality frames and similarity focus) would be helpful to increase individual’s redistribution preferences as well.