This paper focuses on how irreversibility influences the effect of uncertainty on firm2level investment deci2 sion with theory of real option pricing. In empirical study , panel data on Sichuan and Chongqing 227 firms in period of 1998 —1999 is used to test predictions from models of irreversible investment under uncertainty. Survey informa2 tion on the entrepreneur’s subjective probability distribution over future demand for the firm’s products is used to construct the expected variance of demand , which is used as a measure of uncertainty. Empirical results support higher uncertainty raises the hurdle level that triggers investment . Moreover , the results have not sufficient evi2 dences to prove the prediction that firms wait to invest until the marginal revenue product of capital reaches a firm2 specific hurdle level , and some reasons for explaining this phenomenon are given.