Abstract: This paper investigates the effects of FDI on technology innovation of China's domestic enterprises based on the panel data of 34 manufacturing from 2001—2006.Resultsshow that,in the whole,the FDI effects on technological innovation capacity of domestic enterprises are obviously positive,but the effects on state-owned enterprises are unobvious.It indicates that the positive effects on technological innovation of domestic enterprises are mostly absorbed by private enterprises,and state-owned enterprises have not got benefits from FDI.