ABSTRACT Yang Kuo‐Shu—widely regarded as the Father of Chinese Indigenous Psychology —was the central figure in a four‐decade movement that sought to reorient psychological research within Chinese societies toward culturally grounded foundations. The movement succeeded in establishing institutional infrastructures, cultivating successive generations of scholars, and producing a substantial corpus of studies attentive to local meanings and practices. Yet, this article argues that its ultimate aspiration—to construct an autonomous Chinese psychological system—remained unfulfilled. Drawing on extensive archival and historical materials, the study traces the intertwined trajectories of Yang's intellectual career and the indigenization project he led. It contends that the movement's fundamental limitation resided in an unresolved epistemological dependence on Western scientific metaphysics. Despite its anticolonial impetus, it inadvertently reproduced a form of academic self‐colonization, remaining confined within the very ontological assumptions it sought to transcend. By situating this paradox within broader debates on decolonization and knowledge production, the article reexamines both the achievements and the enduring dilemmas of psychological indigenization in the Chinese context.