Abstract: The rapid expansion of foreign direct investment (FDI) facilitates high-speed economic growth in China, and inevitably results in the increase of CO2 emission. This paper compares the impact of FDI and that of domestic investment on CO2 emission based on provincial panel data of China from 1999 to 2011. It shows that there is a long-term relationship amongst CO2 emission, foreign investment, domestic investment, industrial structure and urbanization level. Although investments from both domestic and foreign enterprises increase CO2 emission in China, the foreign enterprises have less impact on CO2 emission. A 1% increase in FDI leads to increase CO2 emission by 0.22% and CO2 emission per capita by 0.20%. A 1% increase in domestic investment leads to increase CO2 emission by 0.42% and CO2 emission per capita by 0.32%. The panel data analysis also shows the raise of the secondary industry proportion and urbanization level increase CO2 emission in China significantly.