Innovation　is　an　imperative　way　of　harmonizing　the　relationship　between　environmental　protection　and　economic　growth.　Reasonably　creating　institutional　pressure　to　stimulate　the　innovation　vitality　of　enterprises　is　a　crucial　issue　in　promoting　the　modernization　of　ecological　environment　governance　systems　and　governance　capacity.　This　paper　considered　China＇s　new　environmental　protection　law　(NEPL)　as　a　quasi-natural　experiment　to　evaluate　the　impact　of　environmental　regulation　on　enterprise　eco-innovation　in　a　difference-in-difference　(DID)　framework.　It　also　identifies　the　conditions　of　the　NEPL　that　encourage　enterprise　eco-innovation.　We　found　that　the　NEPL　significantly　hinders　the　level　of　enterprise　eco-innovation.　This　inhibition　is　mainly　associated　with　invention　patents　with　high　degrees　of　innovation　rather　than　utility　model　patents,　resulting　from　tightening　financing　constraints.　Further,　when　considering　enterprise　heterogeneity　in　terms　of　ownership,　size,　and　cost　transfer　ability,　private　and　small-sized　enterprises　and　enterprises　with　higher　cost　transfer　ability　are　more　affected　by　the　implementation　of　the　NEPL.　Furthermore,　enterprises　with　a　better　business　environment　are　more　likely　to　perform　innovation　activities.　Our　findings　have　valuable　implications　for　evaluating　the　effects　of　policy　implementation　more　scientifically　and　comprehensively,　and　consequently,　promoting　the　＂innovation　compensation　effect＂　of　environmental　regulation.