From the point of view of enterprise privatization, this paper analyzes the impact of privatization on environmental pollution by constructing a dual economic theory model and an empirical model. The theoretical study shows that the capital intensive degree of urban sector is higher than that of rural sector. If the marginal utility obtained by rural workers from environmental improvement is smaller than that obtained by urban worker from urban area, when the increased privatization results in reduced emissions per unit of output, there are the following occurrences: (1)There is an increase in the output of urban industrial sector due to the increase in the use of labor and capital in the urban sector and a decrease in the output of agricultural sector owing to the decrease in labor and capital in rural areas, that is, urban expansion and rural contraction; (2) The total number of unemployed people in urban areas will increase; (3) If the effect of privatization on the reduction of pollutant emissions per unit of output is greater than that of the increase of industrial output on the increase of pollutant emissions, the natural environment will ultimately improve. If privatization results in higher emissions per unit of output, the opposite conclusion can be drawn. The empirical results show that increasing the level of privatization of enterprises in China is conducive to reducing the emissions of solid waste, wastewater, sulfur dioxide and soot per unit output, and the capital input is also conducive to reducing the emissions of pollutants per unit output.