The current developing situation and prospect of chemical industry of Shandong Province is reviewed and analyzed. The chemical industry of Shandong Province has developed rapidly with a large economic aggregate, and has become one of the pillar industries of Shandong Province. However, its structure is not reasonable and its processing depth is inadequate. This paper points out the main contradiction in the developing process of chemical industry of Shandong Province and its main environmental problems. Combined with the relative industry policies issued by the Country and Shandong Province, several suggestions and recommendations on implementing the sustainable development strategy in chemical industry of Shandong Province are brought out, which includes promulgating the related policies and regulations to establish a threshold of environmental admittance for new chemical projects, gathering the chemical projects into the centralized areas, paying attention to the construction of environmental infrastructure facilities and its perfection of the chemical industry parks, and strengthening the supervision and management of environmental risk of the chemical projects, as aims to harmonize economic development and environmental protection, and to realize the harmonious state of society, environment and human beings, on the base of a fast economic progress of chemical industry