The management of the Negative List for Foreign Investment Access is a crucial institutional innovation in China’s eff orts to expand opening-up and optimize the business environment. How this system infl uences and reshapes the supply chain landscape is a pivotal question for understanding the modernization process of China’s supply chains. This paper takes the overall structure of upstream intermediate input suppliers and downstream customer networks in the supply chains of Chinese enterprises as the research object, and systematically examines the impact mechanism of the Negative List System for Foreign Investment Access on the diversifi cation of enterprise supply chains from a theoretical perspective. Based on the supply chain data of Chinese listed companies from 2008 to 2019, an empirical test is conducted using a multi-period diff erence-in-diff erences (DID) model. The study fi nds that the entry of foreign investment signifi cantly promotes the improvement of the supply chain diversifi cation level of Chinese enterprises. Mechanism analysis shows that this effect is mainly achieved through two paths: improving the technological level of enterprises and reducing fi nancing costs. Further heterogeneous analysis reveals that the promotion eff ect of foreign investment entry on the diversifi cation of upstream suppliers is stronger than that on downstream customers. Meanwhile, its eff ect on enhancing supply chain diversifi cation is more signifi cant for small-scale enterprises, enterprises in eastern China, manufacturing enterprises, and enterprises in regions with a high level of marketization. This study provides important empirical evidence and decision-making references for China to further optimize foreign investment policies and promote the modernization of enterprise supply chains.