China has undergone rapid changes since adoption of the reform and opening policy in 1978. Meanwhile, China has paid a great cost; e.g. severe environmental deterioration making it one of the most endangered urban and rural environments in the world. In improving the environment, China has taken a number of possible measures including promotion of ISO 14001. To investigate the implementation status of ISO 14001 and its impact on enterprises in China, a structured questionnaire survey has been conducted. The result indicates that the major motivation for the system was to seek entering the international market. The other benefits are: standardization of environmental management procedures for internal operations; saving resources and reducing wastage for corporate management; improving corporate image (CI) for marketing effects; enhancing environmental awareness of suppliers for supplier relations. Using relative importance analysis, the study identifies the critical factors affecting implementation of the standards. The top five out of twenty-seven factors are: (1) environmental consciousness of top leader; (2) environmental consciousness of middle management; (3) well-defined responsibility on environmental management; (4) legal system; and (5) legal enforcement. Based on the analysis and discussion, the study concludes that Chinese government should take the lead in improving the legal framework, providing financial support and training to promote ISO 14001 to the Chinese enterprises.