Business environment is not only an important soft power for regional economic development, but also a core competitiveness to attract industrial project investment. Taking the reform of administrative examination and approval as the starting point, this paper empirically examines the effect of business environment on attracting investment and its mechanism. This paper examines the impact of administrative examination and approval reform on foreign direct investment and its mechanism. It is found that the establishment of administrative examination and approval center promotes the scale of foreign investment in China, and this eff ect is sustainable; This reform has transformed government functions, broken institutional barriers and attracted foreign direct investment in China; At the same time, the decline in transaction costs also promoted foreign direct investment. From the perspective of specifi c implementation measures, the more approval items the administrative examination and approval center stationed, the greater the impact on foreign direct investment. In addition, factors such as the mode of foreign direct investment, industry attributes and the country of origin of investment will affect the investment effect of administrative examination and approval reform. The conclusion of this paper means that deepening the reform of investment examination and approval system and continuously optimizing the foreign investment environment are powerful measures to stabilize the basic market of foreign investment.