Abstract: With the deterioration of China's ecological environment, green technology innovation has become an important way for the transformation and upgrading of manufacturing industry under the constraints of environmental regulation. We use the mechanism of environmental regulation, green technology innovation and the transformation and upgrading of China's manufacturing industry as an entry point, and GMM estimation method is used to test the impact of environmental regulation on technological innovation and green technology innovation on manufacturing transformation and upgrading. The results show that strict environmental regulation will promote enterprises to carry out green technology innovation, and green technology innovation and manufacturing transformation and upgrading have a U-shaped relationship. We further divide the national sample into the eastern region and the central and western regions to exam the regional differences in the transformation and upgrading of green technology innovation. The results show that the green technology innovation level in the eastern and the central and western regions is located on the left side of the U-shaped curve. With the continuous implementation of green technology innovation, the central and western regions will reach the “threshold value” of the U-shaped curve and achieve transformation and upgrading of the manufacturing industry earlier than the eastern region.