Amid the rise of the new industrial revolution, the digital economy has gradually become the major fulcrum behind China’s industrial transformation. This study examines how the digital economy impacts enterprises’ substantive green innovation and its mechanism using data drawn from a sample of Chinese listed companies covering 2011–2019 and focusing on internal control and long-term investment. The findings of a mechanism analysis indicate that the digital economy can significantly enhance enterprises’ substantive green innovation by promoting the quality of internal control and stimulating long-term investment. Incorporating internal governance and agency issues into the research framework reveals that a higher level of corporate governance enhances the facilitation influence of digital economy on enterprises’ substantive green innovation. Heterogeneity test results show that digital economy has a peculiarly significant role in enhancing the substantive green innovation of enterprises with a high proportion of management ownership. Not only does this study enrich the research on the microeconomic consequences of digital economy and the drivers of enterprises’ green innovation, but its implications also suggest that China should accelerate the construction of new infrastructure and the green transformation of domestic enterprises.