Abstract: Using the panel data of 30 provinces, municipals, autonomous regions from 1998 to 2012 in China and estimating FDI stock according to Perpetual Inventory Method, the paper conducts a panel analysis of impacts of FDI stock on regional innovation capacity. The findings are as follows: After introducing the human capital threshold variable, the interaction terms of FDI and human capital promotes the innovation capacity and prove the existence of human capital threshold, and we also confirm the above conclusion through the researches on the east, middle and west regions in China.FDI does not indirectly promote the innovation capacity.Only if when surpassing the human capital threshold, FDI could promote the regional innovation capacity.

Key words: innovation capacity, FDI stock, human capital threshold, knowledge production function