This paper analyzes the relationship among fiscal subsidies, corporate green innovation and corporate environmental costs by using A-share listed manufacturing companies from 2010 to 2020 in China. It is found that the impact of fiscal subsidies on corporate green innovation shows an inverted U-shaped relationship of first promoting and then inhibiting, and this finding still holds after replacing economic indicators and considering endogeneity issues and other robustness tests. Moderate financial subsidies effectively promote green innovation by reducing enterprises’financing costs and improving their independent R&D capabilities, and mainly stimulate them to fundamentally innovate substantively rather than strategically. At the same time, it is more manifested in heavy polluters. Further analysis shows that the inflection point of the relationship between financial subsidies and green innovation shifts to the left when the environmental cost faced by enterprises increases, indicating that the promotion zone of financial subsidies for green innovation decreases, which shows the increase in environmental cost reduces the positive effect of financial subsidies in leading enterprises to green technological innovation; however, for enterprises with less environmental cost pressure, the promotion zone shrinks. However, for enterprises with less environmental cost pressure, the promotion range of financial subsidies for green innovation is relatively larger. Therefore, the government should not only plan the scale of financial subsidies reasonably, but also evaluate the environmental costs faced by different enterprises to reach the goal of policy. Besides, adjusting the optimal scale of financial subsidies according to the environmental cost pressure faced by enterprises also should be considered when simulating green innovation and maximizing the utility of financial subsidies.