Economic inequality has been demonstrated to be deleterious to subjective well-being. The present study aims to uncover whether perceptions of upward social mobility would buffer the detrimental effects of economic inequality on subjective well-being. To answer this question, the current study utilized a large-scale nationally representative sample in China (N = 63,777) to investigate perceptions of social mobility, economic inequality, and their joint associations with subjective well-being. Multilevel modelling showed that individuals who perceived higher levels of social mobility (both in the past and in the future) had higher levels of subjective well-being, whereas economic inequality was not significantly associated with subjective well-being. More importantly, we found an interaction effect of perceptions of past mobility and economic inequality on subjective well-being. The interaction effect demonstrated that higher economic inequality reduced the positive relationship between past mobility and subjective well-being. These findings indicate perceptions of social mobility may have protective effects on subjective well-being, but such effects could be attenuated by unequal income distributions.