Introduction of FDI is turning to quality from quantity as Yangtze river economic zone is undergoing a green transformation. This paper, based on 2008 to 2018 panel data of 11 provinces / cities in Yangtze river economic zone, uses dynamic panel model and panel threshold model to study their relation among FDI quality, environmental regulation and industrial structure upgrading. FDI quality and environmental regulation largely promote the industrial structure upgrading, varying among the down-, 

middle- and up-stream of the Yangtze river economic zone that the down-stream attracts the quality FDI more, the middle-stream applies a more flexible environmental regulation, and the up-stream is loosing talents. FDI quality and environmental regulation have single thresholds, pollution industries will be migrated to the Yangtze river economic zone when environmental regulation is lower than the threshold value, resulting in pollution shelter effect. Increment of FDI will lead to locked low-end industries if FDI quality is less than the threshold value.