In 1994, the government of Egypt issued a comprehensive environmental law concerning environmental protection from pollution sources in Egypt. The first main goal of this study is to examine to what extent inefficiency scores of plants in both private and public sectors are affected by environmental regulations done by these plants through the period 1996-2001. Most empirical literature on this area focused mainly on developed countries especially the U.S. due to the availability of data. Thus, this study tries to add some to previous literature through examining this relationship under different economic and development stages. To investigate this relationship, we designed and executed a survey of manufacturing plants in three Egyptian cities, and used a stochastic frontier cost function to measure inefficiency levels of plants and test factors affecting these scores. The results of the econometric models indicate that plants more affected by environmental regulations are associated with higher inefficiency levels. Also, we find strong evidence that plants working under private ownership are more efficient than public plants. Additionally, these results reveal that plant-size has a negative effect on inefficiency levels, which mains that larger plants are more efficient than smaller ones. However, the effect of plant-age on cost inefficiency is ambiguous. The second goal of this study is to examme possible factors determining plant's environmental performance. Two methodologies (truncated regression and ordered probit model) are used in this part depending on dependent variable used. Results of the truncated regression highlight the role played by regulators, market pressures, and worker security as the main factors accounting for plants' environmental performance. Plants face high international competition, produce final consumer goods, and subject to high rate of inspections are more likely to have better environmental performance. Results of the probit model reveal that plant characteristics have a significant effect on plant's environmental expenditure, where private, older, and larger plants tend to spend more in environmental concerns. Also, variation in inspection rates and consumer pressures are seen to have a strong impact on plant's environmental expenditure.