Shanghai started its pilot trial on Pollutant Discharge Permit management from 1980's，and has been working on the improvement of the PDP management system ever since. In November 2016，the General Office of the State Council of the People's Republic of China issued the Implementation Plan on Permit Mechanism for Controlling Pollutant Discharge，aiming at building PDP into the very core management system for controlling stationery emissions. As an update of the existing PDP management，this ‘new version’ has taken into considerations of the utmost requirements for environmental protection in China under current circumstances. But what kind of institutional design does it need to build PDP into the core management system？ How to implement？ What impacts it might have on governmental departments，business sectors and the general public？ This paper will try to explore the key principles and the policy implications of the PDP management，taking the example of Shanghai's institutional design and implementation practices on PDP management.