Taking mixed ownership reform as the background,using the data of Shanghai and Shenzhen A-share private listed companies from 2005 to 2018, this paper examines the impact of state-owned shareholders’ participation in governance on the agency costs of M&A in private enterprises, and analyzes the mechanisms between the two. The results show that the state-owned shareholders, as the dual status of an external major shareholder and a government regulator, can significantly reduce the private enterprises’ M&A agency costs by strengthening internal governance and external supervision, in which the appointment of directors can alleviate the first type of agency problem and equity balance can alleviate the second type of agency problem.Further analysis finds that this interaction is more significant in the case of lower levels of regional legalization, industry competition, and the quality of internal control.