The limitations of end-of-pipe solution and cleaner production (CP) technologies inspired people of new thinking in pollution prevention and control. Formally proposed in 1989, Industrial Ecology is an emerging field that focuses on the twin goals of economic development and environmental quality. The concept requires that an industrial system be viewed not in isolation from its surrounding systems, but in concert with them. It is a system view in which one seeks to optimize the total materials cycle, from virgin material, to finished material, to component, to product, to obsolete product, and to ultimate disposal. In the past two decades, industrial ecology made an astonishing progress in both theory and practices. The paper provides a critical review of its background and development, and specifically discusses its opportunities and challenges in China, with an emphasis on eco-industrial parks (EIP). In addition, the paper also explores the future of industrial ecology from the perspectives of academic merits and practices in the real world. It is expected that industrial ecology will be widely applied in not only developing countries, but developed countries as well. Its philosophy particularly finds its most possible application in the promotion of circular economy in China. So far, China has the most EIPs in the world. Central government of China is taking circular economy as one of key components in its second scientific development strategy. In terms of methodology, a new trend is the introduction of social sciences into the analytical framework. More quantitative analysis and in-depth work need to be done in the next stage to turn ideas into results. However, there is still debate about if IE can be called a paradigm. Such doubts in most cases come from economists and ecologists. Therefore, industrial ecologists owe them satisfactory answers not only in theory, but in practices as well.