Based on the Province-Managing-County Fiscal Reform, the effect of fiscal decentralization on air pollution (haze) is empirically analyzed. The DID model estimates that fiscal decentralization deteriorates air quality. What’ more , the heterogeneity analysis finds that fiscal decentralization has a more significant effect on air pollution in the central and Western regions, less energy-consuming provinces (municipalities or autonomous regions) and non-top 100 counties. In addition, the mechanism analysis finds that fiscal expenditure structure and local government competition are two mechanisms that fiscal decentralization affects air pollution. Finally, by comparing fiscal decentralization with administrative decentralization, it is found that administrative decentralization can significantly reduce air pollution level. The study provides an idea for evaluation of administrative system reform from the perspective of environment.