Hidden economy is an important source of industrial environmental pollution,seriously affects the effectiveness of environmental regulation,while it as an index of the weakening of the existing institution system has not caused attention.In view of this,taking Hunan province as an example of the "two-type society" national demonstration zone,based on the perspective of hidden economy from both theoretical and empirical dimensions to analysize the effect of environmental regulation on industrial environmental pollution.The theoretical results show that the output and profit generated by the hidden economic sector is a decreasing function of the environmental regulation strength,and industrial environmental pollution is also a decreasing function of the environmental regulation strength,while industrial environmental pollution is an increasing function of hidden economy.The empirical results show that the direct effect and indirect effect of Hunan environmental regulation strength for the industrial environment pollution are significantly negative,except for the per capita industrial sulfur dioxide emissions,hidden economy for the pollution of the environment has a significant positive effect.Accordingly,policy recommendations are put forward to reduce industrial environmental pollution from the aspects of environmental regulation and hidden economy.