Although territorial disputes have been much studied, the application of “two-level game” analysis in peace research and conflict resolution is still relatively unexplored. In this essay, I seek to use the analytical propositions derived from this “two-level game” bargaining framework to explain the success, failure, or partial resolution of sovereignty negotiations over China’s island claims to the disputed islands of the Diaoyu/Senkaku, Amur/Ussuri rivers, and South China Sea. This essay will focus on the interaction between governments and domestic nationalist groups, the role of institutions, and the strategies of negotiators to explain the development of the territorial disputes. I will evaluate how different political and social preferences, historical memories, economic priorities, side payments, and institutional constraints affect inter-state bargaining behavior and relations between the government and different segments of society. Basically, I am interested in finding out what significant roles national, sub-national and transnational actors can and do play in aggravating, minimizing, terminating or preventing conflicts over island claims involving China.