Abstract: In the context of the new eraꎬ capital regulation and guidance are of great significance in optimizing the distribution pattern of national income. With the reform of antimonopoly en forcement agencies in 2018 as a policy shock, this paper investigates the impact of capital regulation on withinfirm wage inequality based on a difference in differences (DID) method. The results show that capital regulation strengthens antimonopoly regulatory power and enforcement efforts and has a significant improvement effect on within firm wage inequality, which is equivalent to a 10. 76% reduction on the average before the reform. The mechanism test suggests that in response to the strict regulation of the antimonopoly enforcement on capitalꎬ firms are forced to optimize the structure of labor allocation and improve the efficiency of labor allocationꎬ which reduces the withinfirm wage inequality. Heterogeneity analysis shows that the impact of capital regulation on wage inequality is larger among non SOEs, firms located in regions with higher market segmentation, and firms with greater income inequality.