Based on “the Eleventh Five-Year Plan” target emission reduction responsibility system and the Annual Survey of Industrial Firms in China, we use the DID method to test the impact of environmental regulations on deindustrialization in old industrial cities and its mechanism. We find that stronger environmental regulations don’t exacerbate the de-industrialization at the national level, but they do in old industrial bases. Furthermore, the impact is more significant in state-owned enterprises, enterprises in heavy-pollution industries, enterprises in cities with stronger resource dependence, and enterprises in areas with lower marketization degrees. The mechanism test shows that the effect is mainly caused by crowding out capital investment and innovation. Based on these results, this paper puts forward some advices to deal with regional deindustrialization under environmental regulations through driver conversion and efficiency improvement.