In peer-to-peer file sharing systems, file replication technology is widely used to reduce hot spots and improve file query efficiency. Most current file replication methods replicate files in all nodes or two endpoints on a client-server query path. However, these methods either have low effectiveness or come at a cost of high overhead. This paper presents an Efficient and Adaptive Decentralized file replication algorithm (EAD) that achieves high query efficiency and high replica utilization at a significantly low cost. EAD enhances the utilization of file replicas by selecting query traffic hubs and frequent requesters as replica nodes, and dynamically adapting to non-uniform and time-varying file popularity and node interest. Unlike current methods, EAD creates and deletes replicas in a decentralized self-adaptive manner while guarantees high replica utilization. Simulation results demonstrate the efficiency and effectiveness of EAD in comparison with other approaches in both static and dynamic environments. It dramatically reduces the overhead of file replication, and yields significant improvements on the efficiency and effectiveness of file replication in terms of query efficiency, replica hit rate and overloaded nodes reduction.