The　impact　of　government　green　subsidies　on　firms＇　green　innovation　behaviors　and　sustainable　development　has　been　recognized　in　the　existing　literature,　but　the　deep　relationship　remains　poorly　understood.　This　study　aims　to　examine　the　mechanism　of　how　government　green　subsidies　influence　firms＇　financial　performance　via　green　innovation　and　how　the　mediating　effect　varies　under　different　contingent　conditions.　Empirical　results　based　on　data　of　Chinese　listed　companies　between　2006　and　2018　reveal　that　green　subsidies　have　positive　effects　on　green　process　and　product　innovation,　but　only　green　product　innovation　can　rise　higher　financial　performance,　which　further　verifies　that　green　subsidies　positively　influence　financial　performance　through　green　product　innovation　rather　than　green　process　innovation.　In　addition,　both　higher　absorptive　capacity　and　higher　market　turbulence　strengthen　the　indirect　effect　of　green　subsidies　on　firms＇　financial　performance　via　green　product　innovation.　Our　study　provides　useful　implications　for　enterprises　by　revealing　the　influence　mechanism　of　green　subsidies　on　financial　performance　through　green　innovation　under　different　leveraging　levels　of　internal　and　external　conditions.　It　also　provides　basis　for　the　government　to　formulate　relevant　environmental　policies.