With the deepening and development of the management system reform of power industry, China has formed separate production and management mode of power plants and transmission grid operation. However, in the separation of generation, diversification of property rights and market competition environment, in order to reflect the fair competition and higher prices for better quality in the power plant, it is necessary to analyze cost and reasonable pay of ancillary services, and gradually establish and improve the ancillary services marketsystems. Domestic and international power system operation practice shows that different power systems have different demand and ways of the development ancillary services. Based on China’s actual situation of ancillary service market development and advanced experience of typical foreign national ancillary services market, this paper studies the status, cost, demand, supply capacity, compensation mechanisms of ancillary services, and the relationship needed to coordinate deeply, so as to improve the understanding of electricity businesses and grid operator assisted services, and provide a reference of the development of relevant policies for the government. The main contents of this article are as follows.First, based on the comprehensive analysis of domestic and international power-related ancillary serviceas market, this paper studies the theory of ancillary services development in competitive electricity mrket. in the view of the Ancillary Service market operation mechanism, this paper researches market model and pricing mechanisms of typical foreign national ancillary services markets, in the terms of comparative analysis of pricing models, access methods and costs sources in the market. According to the proposed definition, types and characteristics of the ancillary services, the specific applications of market model and access method of ancillary service market, the development trends of foreign power ancillary services market are elaborated. All of this will provide a theoretical foundation for follow-up study in this paper.Second, this paper firstly proposes definitions, characteristics and the specific content of ancillary services in the competitive electricity market environment. Based on the analysis of reactive power ancillary services and market structure, the price system based on the minimum payment of seller quotes is established, which can be used to analyze the reactive power capacity characteristics of synchronous generators, and then the optimal purchase model of reactive power ancillary services in a competitive electricity environment is also constracted with the analysis of reactive power ancillary services. Using scenario simulations, this paper further discusses the behavior of the market structure-based reactive power service procurement, and the uncertainty of market demand and sellers offer.Third, with the concept of electrical distance introduced, this paper establishes a competitive market based on local voltage control area and four parts offer of reactive support services. In this reactive power ancillary services market, ISO can obtain the three control regions of reactive power ancillary services prices according to suppliers’ offer, and then they will design independent voltage control area market while pursuing minimum payment of the entire system. Combining CIGRE32-bus analog system, single scenario simulation and joint scenarios simulation are analyzed. Thus, the reactive power ancillary services market on the local area will be researched with the simulation results.Forth, in the perspective of Game Pricing Theory and Marginal Cost Pricing Theory, this paper proposes cost allocation methods and pricing mechanism of reactive power ancillary services in the competitive electricity market environment. And then ancillary services cost allocation model based on Aumann-Shapley methods and pricing model based on minimum transmission line loss are constracted, as well as cost-sharing model based on minimum deviation and the regulation of the function minimum tuning function. Moreover, reactive power ancillary services market is studied with scenario simulation of CIGRE32-bus test system.Fifth, with comprehensive description of theoretical basis of the spare auxiliary services market design and trading decisions, this paper introduces definitions, characteristics and organizational process of spare ancillary services, and then designs ancillary services market isolated from energy reserve market. Combined with a numerical example, the relationship between spare ancillary services market prices and effective reserve is quantitatively analyzed in perfectly competitive markets and imperfectly competitive markets.The research results will provide theoretical basis for market model, cost allocation, pricing mechanism and trading decisions of China’s ancillary services market, wihch is conducive for the further development of electricity services and the safe and stable operation of power system.