Based on provincial-level data from 2004 to 2021, the regional green and low-carbon transformation is measured by Green Total Factor Productivity (GTFP). The Spatial Durbin Model is applied to test the causal relationship and mechanism between the coordinated development of two-way FDI and GTFP. The research finds that coordinated development of two-way FDI can enhance local GTFP and also has a spatial spillover effect; both local and spatial spillover effects are more pronounced in coastal and southern regions; technological innovation is a significant influencing mechanism, with imitation innovation playing a positive role in the short term, while independent innovation is the “long-term strategy” for enhancing GTFP; high-quality government governance positively moderates the positive impact of impact of coordinated development of two-way FDI on GTFP. This article not only provides new evidence for the green economic effects of high-level open policies but also offers theoretical references for leveraging the high-quality “dual circulation” new development pattern to promote regional green and low-carbon transformation.