Prefabricated construction (PC) has been regarded as a critical approach to address the challenges confronted by the construction industry in achieving sustainable development. Despite the Chinese government having issued various policies to promote the development of PC, this field remains in its infancy, thus suggesting an unsatisfactory policy system. Few studies have been conducted on the policy evaluation of target stakeholders who are closely related to the policy goal. To fill this knowledge gap, this study innovatively adopts importance-performance analysis to evaluate the policies on PC development with reference to the policy framework, including environmental, demand, and supply instruments. First, the explicit importance and perceived performance levels of policy instruments were investigated through a questionnaire survey conducted in Chongqing, China. Gap analysis indicated that all these policy instruments failed to meet the demand of target stakeholders. The implicit importance of policy instruments was obtained by using partial correlation analysis. Grid analysis revealed that the policy instruments can be divided into basic, key, excitement, and secondary factors, and finally, the most crucial areas of policy improvement were determined. The results of this study indicate different policy instruments were perceived with different importance in improving the policy system of PC development, and stakeholders showed heterogeneous needs of policy instruments of PC development. Generally, all the policy instruments were perceived as negative, and more attention should be paid to the policy instruments of infrastructure construction, technical development, talent support, economic incentives, public services, and guide information. This study confirmed the applicability of importance-performance analysis in policy evaluation and provided new insights into effectively improving the efficacy of policy system in promoting the development of PC.