Taking Chongqing as an example, we analyze the effect factors of undertaking capacity in regional industrial transfer in western China with the provincial panel data from 2002 to 2010.The spatial econometrics analysis shows the results. About the cost factors, the tax is the most important factor for the undertaking capacity of industrial transfer. About the investment environment factors, the economic development and mercerization level can reduce the undertaking capacity while the technology gap will promote it. The influence of regional industrial concentration, openness and infrastructure construction condition is quite limited. And the technology gap is more important than others. About the market potential factors, relative industrial cost can reduce the undertaking capacity while the effects of relative total assets and the sale rate are not important. In view of this, we give some policy suggestions to improve the undertaking capacity of industrial transfer in Chongqing.