In the process of industrial structure transformation from polluting to cleanerization, environmental regulation plays an important role as an important part of the bankruptcy mechanism. 277 prefecture-level cities from 2003 to 2020 were selected as research samples. Using panel and threshold models, it was verified that environmental regulation can force resources to flow rationally between industries, thereby promoting the evolution of industrial structure towards cleanness. Moreover, the role of environmental regulation in industrial structure upgrading shows heterogeneity in stages, and this impact is a double threshold change, showing a trend of “diminishing marginal returns”. At this time, when the stamina of industrial structure upgrading is insufficient, technology can play a role in promoting environmental regulation to cross the threshold. The research conclusions have certain implications for how to make full use of the role of environmental regulation and technology to promote the upgrading of industrial structure towards cleanness.