<p>This study proposes a more nuanced understanding of the government-nonprofit relationship by examining how government regulations moderate the sector size relationships between government and nonprofits. I argue that when government regulations change, different models—supplementary or complementary—prevail in a respective policy subsector. In the context of Chinese environmental nonprofits, I focus on two government regulations that are determinant for nonprofit development: regulation of registration and regulation of overseas funding generation. Analyses of a longitudinal dataset (2009–2020) show that environmental nonprofit organizations are in a supplementary relationship with government when the latter encourages overseas funding generation, while the relationship becomes a complementary one when government strengthens its control on overseas funding yet loosens the control over nonprofit registration. This study contributes to the literature by testing moderating effect of the classic government-nonprofit models and by illustrating the dynamics of government-nonprofit relationships in China.</p>