Abstract: Under the dual pressures of pollution control and economic transformation, the academic community has not yet reached a consensus on whether and how environmental regulations affect high-quality economic development. Based on the panel data of 30 province-level administrative regions from 2009 to 2018, this paper analyzed the relationship of environmental regulation and high-quality economic development from the perspective of structural transformation, and the spatial Durbin model was used to describe the competition of environmental regulations and explore the spatial spillover effect on high-quality development. The research found that: (1) Environmental regulation had a significant and stable promotion effect on high-quality development, in which efficiency improvement and technological progress were the main sources. There was a U-shaped dynamic law in environmental regulation and high-quality development. Now China’s average environment regulation is already in the ascending stage of the U-shaped curve, but the low-regulation intensity group is still in the descending stage of the U-shaped curve. (2) Environmental regulation indirectly promoted the high-quality development through the intermediary channels of industrial structure rationalization and advancement, and the intermediary effect was greater than the direct effect. Environmental regulation is conducive to fully encouraging the industrial structure rationalization to reduce the efficiency of factor replacement, and enhance the positive effects of industrial structure advancement on the upgrading of factors, thereby contributing to high-quality development. (3) After the spatial relevance was considered, the effect of environmental regulations in promoting high-quality development weakened, and the competition of environmental regulations among local governments showed a heterogeneous impact. The eastern region lacked synergy in the implementation of environmental regulations, thus producing negative spatial spillovers, while in central and western regions, environmental regulations had positive spatial spillovers on high-quality development. Finally, in the formulation and implementation of environmental regulatory policies, the effects of industrial structure and spatial effects were optimized, and a feasible path to promote high-quality economic development was provided.