This study investigated the effects of marketization on the inflow offoreign direct investment to sub-national regions. The levels of marketizationin sun-national regions are measured with the marketization indexesdeveloped by NERI(National Economic Research Institute, China ReformFoundation). The focused research periods are form 1998 to 2010, with 31cities and provinces. The dependent variable is the inflow amount of FDIin each of sample regions during the research periods. The independentvariables are market size, infrastructures, labor cost, and marketization. ThePanel fixed effect model regression results show that the level ofmarketization has a positive effect on the inflow of FDI. For each ofsub-components of marketization, the role of government, the developmentof factor market, the development of market intermediaries and the legalenvironment for the market have significant and positive effects on the FDIinflow. In case of other variables, the bigger the market size and the lowerthe cost of labor, the more foreign firms have invested to the regions