Chinese state media say a battery plant has been closed after more than 120 children living nearby were found to have lead poisoning.
Officials in the city of Longyan in the south-east province of Fujian have launched an inquiry into the poisoning, Xinhua news agency says.
Authorities say they will pay medical costs and test all children aged under 14 who live near the plant.
China has reported a series of cases of children with lead poisoning this year.
Last month, hundreds of children living near smelting plants in Shaanxi and Hunan were found to have excessive amounts of lead in their blood.
The Xinhua report said two medical institutions had tested 287 children under 14 in Longyan.
After 121 were found to have high lead levels in their blood, the government closed the suspected source of the pollution, the Huaqiang battery plant.
A smelter in northern Shaanxi province has also been closed
Authorities have also stepped up environmental protection around the plant, Xinhua said.
Residents, quoted by the Associated Press news agency, said the government closed the plant after local people approached officials with test results showing lead poisoning in some children.
One resident said her 11-year-old son was one of those affected.
"I hope the factory will be shut down forever, otherwise I am planning to move out," said the woman, named Yuan, who lives about 500m (550 yards) from the factory.
"I am very worried about my child and hope the government can work out a plan to help the children expel the lead from their blood."
In August, two executives of a manganese smelting plant in Hunan were detained by police after more than 1,300 children fell sick with lead poisoning.
Earlier, another smelter in northern Shaanxi province was closed after more than 600 children were found to have lead poisoning.