This　study　examines　the　impact　of　China’s　industrial　land　approval　reform　(ILAR)　on　the　provision　of　subnational　services.　Utilizing　the　2011　pilot　reform　policy　approved　by　the　State　Council,　we　utilize　a　staggered　Difference-in-Differences　(DID)　method　to　determine　the　reform’s　impact　on　local　economic　growth　and　environmental　protection.　The　findings　reveal　that　the　reform　enhances　local　economic　development　and　decreases　pollution　levels.　Additionally,　the　reform　significantly　decreases　land　resource　misallocation　in　pilot　cities,　enhancing　productivity.　We　also　find　that　local　governments　allocate　more　land　to　the　tertiary　sector　through　this　reform,　achieving　industrial　upgrading.　The　optimization　effects　are　more　pronounced　in　cities　with　higher　fiscal　pressure.　Based　on　these　findings,　we　recommend　that　policymakers　sustain　decentralization　efforts　and　consider　further　incentives　for　cities　under　fiscal　stress.　We　fill　a　gap　in　the　literature　by　linking　land　use　regulation　with　subnational　service　provision,　contributing　to　the　understanding　of　the　socioeconomic　benefits　of　decentralization　and　local　government　service　levels.　©　2024　by　the　authors.