This research delves into the complex relationship between FDI and industrial value-added in Egypt, focusing on economic complexity as a critical factor. Using data from 1998 to 2021 and advanced econometric techniques, including threshold regression analysis, we uncover the non-linear dynamics of FDI's impact on Egypt's industrial sector. Our results challenge traditional linear models, revealing that FDI's influence on industrial value-added is not straightforward. We also find that control variables like human development, trade openness, economic growth, and political stability have significant positive effects on industrial value-added, in line with established economic theories. Importantly, we introduce economic complexity as a pivotal factor shaping this relationship. We use three dimensions of economic complexity -exports, technology, and research- as threshold indicators. Each dimension has a unique threshold value, highlighting the importance of fostering economic complexity in various aspects to attract FDI and promote industrial development. Specifically, our study identifies a U-shaped relationship between FDI and industrial value-added, where FDI has a negative impact when economic complexity is below a certain threshold but becomes positive as complexity exceeds it. This underscores the necessity of policies that promote economic diversification and sophistication. Furthermore, our research underscores the significance of technology and research-based economic complexity. As technological and research capabilities grow, attracting FDI depends on local capacity building rather than simple technology transfer. In conclusion, our research offers valuable insights for policymakers, emphasizing the importance of strategically promoting FDI in alignment with a country's economic complexity. This implies the need to invest in human capital, enhance economic complexity, and implement adaptable policies that respond to evolving complexity landscapes. These findings provide a strong foundation for addressing the challenges of industrial development in our increasingly interconnected global economy.