The paper discusses the method of the substitution by homophones that is extensively used in many fields in China, among others onomastics, such as toponymy or anthroponymy. The Chinese language has always contained a considerable number of homophones, i.e. words pronounced alike but spelt/written differently and having different meanings. The situation resulted from two main factors: the nature of the Chinese language and the sound changes to spoken Chinese language, i.e. a strong tendency to sound simplification. The method of the substitution by homophones is mainly aimed at reshaping already existing names by replacing their previous form, for some reasons unwanted. However, it is also broadly applied to create new names by using words which are homophonic with the words denoting the idea they symbolize. The paper presents some various reasons and aims of the use of the method in the domain of Chinese geographical names, and the more detailed analysis of its use in the changing of old street (hutong) names after 1949 in Beijing. The research material consists of 1,159 hutong names, and the names changed by the use of the method accounts for 23.5% of the total.