Abstract Under the increasingly severe situation of resources and environment, the Chinese government has continuously improved its environmental policies and measures to create a more favorable institutional environment for improving the level of urban green innovation. Based on the panel data of 285 cities in China from 2000 to 2019, this paper discusses the impact of environmental regulation and urban green innovation and their internal mechanism. There are following findings: (1) Environmental regulation is conducive to improve the level of urban green innovation, and has a continuous positive impact. In this paper, instrumental variable method and spatial econometric model are used to verify the robustness of the research conclusion. (2) The influence of the intensity of environmental regulation on the level of green innovation has heterogeneity. In the cities with low intensity of environmental regulation and high level of green innovation, the appropriate improvement of the intensity of environmental regulation is helpful to improve the level of urban green innovation. (3) Human capital is an important influence channel for environmental regulation to improve the level of urban green innovation. The higher level of marketization and the degree of financial R & D expenditure will strengthen the role of environmental regulation in promoting the level of urban green innovation. The above research results provide experience and reference for better implementing environmental policies and promoting urban green innovation and development.