Taking dioxin emissions from incineration and the recycling of home electric appliances in Japan as two case studies, this paper aims to clarify the impact of environmental policy on technological innovation. For our case studies, relevant Japanese patent data were gathered and analyzed for the period 1990-2008. To demonstrate that environmental regulations induce technology innovation, we conducted statistical analysis to compare the number of patents related to each regulation between the period under regulation and period outside the regulation. The results show that after the regulations were introduced, new technological developments occurred for most technological types and the total number of related patent applications was larger even when controlling for other exogenous and endogenous factors such as business cycles and expenditures in Research and Development (R&D). We finally argue that while a possible weakness in these types of direct regulations is the lack of incentives for further innovations, they can still induce innovation if they are flexible and with specific targets. © 2012 Elsevier Ltd. All rights reserved.