In China’s popular culture, Tibetan societies are often imagined and represented as a utopia, or “Shangri-La.” An Yiru’s The Sun and the Moon aptly exemplifies such a myth. This article studies the utopian representation of Tibet in this novel and dissects how Tibet becomes the main character’s ultimate object of desire after his disillusionment with business success and material wealth. The analysis of the novel leads to an elucidation of the ideological effect of Shangri-La in general. The myth of Shangri-La offers a new belief to the public, to fill the ideological and emotional void when the old revolutionary ideal is defunct and the new capitalist value system fails to enchant every person. While Shangri-La appears to be critical of the rule of capital as a socioeconomic order, it actually serves as an ideological fantasy to support such an order. In so doing, Shangri-La as a myth is ideologically conservative.