Leaf Area Index (LAI) is an essential parameter for many process-based ecological and climate models. A large number of LAI products at local, regional, continental, or global scales have been derived from different remotely sensed data. However, due to the lack of the foliage clumping index, most LAI products can only provide the effective LAI (LAIe), which cannot fully satisfy the requirements of ecological and land surface models. In this study, based on the new 500 m resolution foliage clumping index, a new true LAI at 500 m resolution in 8-day intervals from 2003 to 2008 over China is retrieved from Moderate Resolution Imaging Spectroradiometer (MODIS) data. The temporal and spatial characteristics of the new LAI over China are analyzed. The results show that the true LAI and LAIe have similar spatial distribution patterns over China mainly depending on vegetation types. Forests have the maximum LAI larger than 6 averaged over the country in July, followed by shrubs with a mean LAI of 2.45 in July, and croplands and grasslands with the values of 1.5 and 1.0, respectively. Furthermore, the new LAI has been validated using the field measurements in two forest and two grassland areas in China through an upscaling process using Landsat5-TM images. Compared with MOD15A2 LAI, the new LAI shows much stronger correlation with the reference TM LAI in these validation areas.