The paper uses Hansen’s “threshold regression” panel model to test environmental regulation effect on the number of polluting enterprises in Hunan province. The study finds that firstly, the impact on the number of polluting enterprises from environmental regulation indeed exists the single threshold effect, and the threshold value (GDP per capita) is RMB 11,014 yuan; second, the cities, such as Changsha, Zhuzhou, Xiangtan, Hengyang, Chenzhou, Yueyang, Yiyang, Changde, and Loudi are in the high threshold range, while Zhangjiajie, Shaoyang and Yongzhou are in the low threshold range; lastly, the relation between environmental regulation and pollution enterprise’s quantity is not linear, but rather a “U” shape.