This study investigates the impact of Environmental, Social, and Governance (ESG) performance and its three individual pillars on market price efficiency in China, where efficiency is measured using a stock price misvaluation metric. The results show that ESG engagement improves price efficiency by reducing misvaluation. This finding contrasts with evidence from the U.S. market, where institutional investors' responsible investment strategies have been found to make ESG engagement positively associated with misvaluation and to reduce market efficiency. Further analysis reveals that this effect is primarily driven by the Governance (G) pillar, which contributes to mitigating both overvaluation and undervaluation. Additionally, we find that firms' voluntary ESG disclosure, including disclosure of individual pillars, moderates the relationship between ESG performance and misvaluation. Specifically, firms with higher overall ESG or G disclosure scores exhibit a weaker effect of ESG engagement or governance performance on misvaluation, suggesting a substitutive role of disclosure in the ESG–price efficiency nexus.