Abstract: How to exploit and use forest resources reasonably, optimize the forestry industry,develop modern forestry economy,and realize the harmonious development of man and nature are problems faced by China forestry industry. This paper studies on the modeling,simulation and regulation of regional forestry economy with methods of system dynamics. Taking the forestry economy system of Nancha area in Heilongjiang province as an example,a system dynamics(SD) model is built,tested and analyzed based on structure analysis.Several models are stimulated by different groups of policy parameters which have important effect on the system of economy sustainable development.Results show that when proportion of fiscal expenditure on forestry science and technology,proportion of input of science and technology in sales income of enterprise,and investment ratio increase 1% simultaneously,the system would reach an optimal state,which matches the demand of sustainable development.Finally the authors put forward policy recommendations to enhance the development level of forestry economy.