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Quality of life (i.e., QOL) refers to the individual's comprehensive perception of health condition. The traditional line of research on the sibship size penalty has shed light on the resource dilution theory, yet more work is needed to illustrate how such mechanism is contingent on the specific social context. Our paper includes the previously overlooked fertility control policy as the contextual factor, which moderates such relationship between family size and children’s QOL in adulthood by stimulating the intergenerational human capital investment and by providing economic rewards to small families and punishments to large ones. In general, a negative relationship between family size and QOL and the resource dilution mechanism has been shown in our survey data. However, for children born in different time periods (i.e., the pre-nationwide policy, two-child policy and the one-child policy period), the impact of such relationship and mechanism varies. The disparity in the QOL enlarged as the enforcement of the fertility control policy gradually became stricter. Research demonstrates that (1) before any nation-wide fertility control policy was implemented, no health disparities occur among children with different family size; (2) Nevertheless, during the 1970s' two-child policy period, the chasm of QOL between singletons and children with one sibling remains insignificant, while the QOL of children with multi-siblings are found much worse than that of the singletons. The mediation effect of family socioeconomic status (SES) accounts for the differences; (3) After the one-child policy was implemented, the childhood family SES completely mediates the impact of family size on the QOL among families of various sizes. Drawing on a medical-sociological framework, our analysis supports the moderated mediation model, sheds light on the conditional effect of the "resource dilution" theory and the policy's effect on the intergenerational transmission of health disparity as an unintended consequence in China.