This paper introduces the status quo of the system structure of direct subsidy for grain production in China, and analyses the function and essence of direct subsidy for grain production in China as follows: the function of direct subsidy for grain production in China is to protect and promote the development of food industry, ensure food supply and national food security, protect grain growers' interests, and maintain the dominant position of national food trade: the essence of direct subsidy for grain production is the compensation for grain producer's reasonable interests, the compensation for positive externality of grain production, and social costs of adjusting equilibrium between food supply and demand. We discuss the problems existing in the system of direct subsidy for grain production in China and put forward corresponding countermeasures as follows: first, adhere to improving synergetic system of direct subsidy for grain production; second, adjust the direct subsidy method of grain production; third, establish long-term mechanism of subsidy for grain production; fourth, promote the information-based service level of the system of direct subsidy for grain production.