The green development of rural industry is an important carrier of ecological civilization construction and rural revitalization. The difficulty lies in constructing a sustainable environmental cost transformation mechanism to deal with the relationship between economic growth and environmental protection. Taking the environmental protection upgrading of rural iron net industry in Hebei Province as a case, this paper analyzes the transformation mechanism and progress of environmental cost in the transition process from the perspective of ecological modernization. The analysis results show that with the strong regulation of environmental policy, active promotion of industry association and the multiple support provided by the grass-roots government, the rural industry chooses the ways of outsourcing environmental reconstruction tasks and non technical production adjustment to gradually internalize its environment cost, but the process of environmental cost re externalization faces the difficulties of lack of technological innovation and consumer incentives. Its green transformation leads to the increase of production costs and the decline of social welfare. Due to the shortage of R&D and capital, it is difficult for the rural industry in China to take the path of ecological modernization. The establishment of the cooperative innovation of “government-industry-university-research-society” and the green consumption mechanism may help break through the dilemma of re-externalization of environmental costs.