This study investigated the impact of the city-level investment climate (market size, agglomeration, corporate income tax rates and infrastructure quality) on foreign entry location decisions in China amongst the 160 cities with a population more than 1 million from 1996 to 2015. The result indicated that the market size and agglomeration had significant positive effects and corporate income tax rates had significant negative impact on foreign direct investment inflows within the Chinese cities. We also introduced three variables (length of paved road, water supply, electricity supply) for measuring the infrastructure quality of Chinese cities. Our results showed that water supply had a significant positive effect, whereas length of paved road and electricity supply had no significant effects on FDI inflows. Furthermore, this study divided the long sample period into three sub periods—1996 to 2000, 2001 to 2007, 2008 to 2015— and undertook additional analysis on the relationship between the investment climate and foreign direct investment inflows. The results indicated that in the first period(1996-2000), corporate income tax rates had significant negative impact on foreign direct investment inflows, while the effects of market size, agglomeration, infrastructure quality were not significant. In the second period(2001-2007), market size, corporate income tax rates, length of paved road, water supply had significant effects on foreign direct investment inflows. In the third period, market size, agglomeration, water supply had significant positive effects on FDI inflows. We discuss the implications of these findings for researchers and practitioners and suggest future research directions.