Faced with serious industrial pollution and ecological damage, China has been developing environmental industry to solve these problems in recent decades. Environmental service, as one of the most rapidly growing part of environmental industry, has been playing more critical role in economic sustainability. This paper, based on Michael Porter's Five Forces Model theory for assessing the competitive environment and situation of an industry, illustrates the main five forces namely suppliers, buyers, substitutes, competitors and potential competitors that affect the competition situation of the environmental service industry. Finally some suggestions for China government and enterprises in the industry was proposed to provide theoretical guide in order to keep the sustainable development of the industry.