Since the initiation of economic reforms and opening-up policies in China, the nation has witnessed rapid economic growth. However, alongside this economic development and modernization process, China has also grappled with an increasingly severe air pollution problem. As air pollution gradually worsened, the stock market began to react to this environmental concern. This study conducts empirical analysis using all IPO stocks listed on China’s A-share market from 2014 to 2019. The results indicate that air pollution has garnered investors’ attention and significantly negatively impacted the IPO market performance. The impact of air pollution on the IPO performance of environmental stocks is notably more pronounced than its impact on non-environmental stocks, suggesting that air pollution’s influence through fundamental channels is substantial. Rational expectations can thus steer investors towards a preference for investing in IPOs of environmental stocks. This research enriches the field of studies related to the relationship between air pollution and the stock market, addressing the gap in understanding the impact of air pollution on IPO markets.