As we know, translation plays an important role in cross‐culture communication around the world. Literary translation is different from other kinds of translation, because besides word change, translator have to understand writer’s culture and to represent writer’s feeling as well. It is well known that China and Japan keep close literary exchange with each other from ancient time to nowadays. In Tang Dynasty, Japanese emissaries took Chinese poems to Japan. In 18th century, Chinese students who had studied in Japan brought modern literature to China. Luxun, a famous writer on behalf of new literature in modern China, was introduced by many Japanese scholars, and his literature was translated largely in Japan. Thanks to translation, those Japanese audiences without understanding Chinese also can read Luxun’s works and know Chinese society and Chinese culture at that time. Luxun’s short story entitled Guxiang entered Japanese textbooks after the Second World War. One of Japanese translators who dealt with Luxun’s literature, Koubai Inoue, was blamed seriously by Luxun for his mistranslation. This paper analyzes Koubai Inoue’s mistranslation in short story Guxiang, points out differences, including paragraph combination and paragraph separation, direct speech and indirect speech, sentence location, expression of special culture, correcting “mistranslation” and others from the original. The reason for mistranslation is because there are differences between writer and translator, especially their cognitions on literature, translation and audience. For Luxun, literature is an effective way to know other culture, to study from advanced countries and to change China, thus he prefers hypercontextaulisation and literal translation. But Koubai Inoue may consider literature as a way to gain economic interest and he prefers decontextaulisation in understanding the original. Although Koubai Inoue contributed to introduction and translation of Luxun’s literature, he couldn’t translate some Chinese special culture and the deep meaning of the text effectively because of his opinion on literature popularity and free translation. Both translators and audiences should pay attention to a danger‐‐mistranslation of literature will impede cross‐culture communication.