By using a panel dataset of 117 countries from 1991 to 2010, this paper examines the relationship between the degree of corruption and the inflow of foreign direct investment (FDI).The empirical result shows that the degree of corruption in the developing countries has a significantly negative impact on the FDI inflow. This could be attributed to the fact that as many developing countries are in the early stage of economic development, the governments usually impose stringent regulations on import and investment from abroad to protect indigenous firms. In order to eliminate the entry barriers, foreigners are forced to bribe the government officials in the host county and thus face a higher investment cost. As a result, the FDI inflow would decline as the level of corruption increases. Besides, the unhealthy institutional environment found in many developing countries may lead to the outcomes of widespread corruption and government inefficiency. Both in turn indirectly discourage foreign investment.