Investor　sentiment　affects　investors＇　value　judgment,　risk　preference,　and　decision-making　process.　Based　on　the　perspective　of　marginal　cost-benefit　analysis,　we　investigate　whether　and　how　investor　sentiment,　as　a　type　of　behavior　bias,　affects　corporate　tax　avoidance.　The　results　indicate　that　increases　in　investor　sentiment　are　associated　with　increases　in　corporate　tax　aggressiveness.　In　addition,　the　association　is　more　pronounced　for　firms　which　have　more　retail　investors,　which　are　private　enterprises,　and　which　are　located　in　areas　with　weaker　tax　enforcement.　Further　evidence　shows　that　increased　tax　avoidance　induced　by　increases　in　investor　sentiment　significantly　enhances　firms＇　short-term　stock　return,　but　impairs　firms＇　long-term　value.　Our　focus　on　the　impact　of　investor　sentiment　on　corporate　tax　aggressiveness　enriches　the　research　on　the　determinants　of　corporate　tax　avoidance　and　deepens　the　understanding　of　the　cost-benefit　trade-off　of　tax　aggressiveness.　This　paper　also　has　practical　implications　for　regulatory　authorities　and　investor　protection.　©　2021,　Editorial　Board　of　Journal　of　Systems　Engineering　Society　of　China.　All　right　reserved.