Reducing pollution and inequity is essential to the regional sustainable development. However, studies on the spatiotemporal impacts of the water pollutant transfer embodied in trade on water pollution levels and regional environmental inequality levels is insufficient. In this study, we developed an environmental inequality level assessment method and analyzed the impact of grey water footprint transfers within mainland China on regional water pollution levels and environmental inequality levels based on the latest available dataset and water footprint assessment. The results show that grey water footprint transfers have a significant impact on megacities and provinces with water pollution levels close to the critical value. The interprovincial environmental inequality level caused by grey water footprint transfer increased sharply from 2007 to 2012. Certain developed provinces, including Beijing, Tianjin, Shanghai, Jiangsu, Zhejiang, Fujian, and Guangdong, outsourced their grey water footprints while earning extra revenue from 70.8%-100% of the underdeveloped provinces in 2012. From 2012 to 2017, the proportion of developed provinces showing extra earning status decreased and extra paying status increased when trading with underdeveloped provinces. Thus, interprovincial environmental inequity have been mitigated. Our results would help to improve water quality and promote regional equity and sustainable development from a trade perspective.