The reform of the household registration system and the construction of urbanization have promoted the large scale of population interregional migrations in China. The internal migration of population has caused different cultural genes of different provinces to spread all over the country. With the communication and integration of migrant with different cultural backgrounds, the diverse regional cultural environment is created. This paper measures cultural diversity by origin diversity, and through the combination of the census data and the economic census data in 2000 and 2010, the paper studied the impact of cultural diversity on city entrepreneurship activity. The research finds that: (1) Cultural diversity can promote the city entrepreneurship activity. (2) Only when the degree of immigrant social integration reaches a certain level, cultural diversity can have significant effect on entrepreneurship, and the higher the degree of social integration, the stronger the promoting effect.(3) The cultural diversity of city matters for entrepreneurship in both the population inflow city and population outflow city, and the effect in population outflow city is larger.(4) The worse the institutional environment is, the larger the impact of cultural diversity on entrepreneurship activity. In view of the above conclusions, this paper argues that the government should promote the free movement of population, improve social integration of immigrant through institutional reform. Cities should grasp their own characteristics and make full use of diversification dividends, stimulate entrepreneurial activity and achieve better quality of economic development.