In the process of transition, there is complex intrinsic mechanism between fiscal decentralization and public health goods supply. The panel 3SLS Estimate is conducted on the data of 31 provinces from 1995 to 2008 and the results show that the regions with highlydeveloped economy have higher fiscal decentralization degree while total supply amount of public health goods and per capita health fees are growing but the proportion of health expenditure to fiscal expenditure will decrease, that there is a positive relation between marketoriented degree and fiscal decentralization degree and public health goods supply and that the public health goods supply is decreasing in the regions with bigger competition degree.