To achieve carbon neutrality, China is working toward a green transition where a key focus is to promote green innovation among privately-owned enterprises (POEs). Reverse mixed ownership reform, represented by the participation of state-owned capital, is a major direction in the current reform of Chinese state-owned enterprises (SOEs). Nevertheless, few studies have thoroughly investigated the impact of state-owned capital participation on green innovation in POEs. Thus, this research aims to analyze how state-owned capital influences POEs’ green innovations. Using an unbalanced panel dataset of 12,206 firm-year observations of Chinese listed companies from 2011 to 2019, we employ the fixed-effect ordinary least square (FE-OLS) as an effective estimation method to control unobserved individual heterogeneity and potential endogeneity. The results show that state-owned capital can significantly promote POEs’ green innovation. Mechanistic analyses suggest that state capital eases financial constraints and attracts more creative talent to work for the private sector, thus promoting green innovation. In addition, our baseline findings are more salient for enterprises with political connections, those operating in heavily polluting industries, and those located in areas with more stringent intellectual property rights (IPR) legislation. Finally, these findings are confirmed significant, even with endogeneity concerns and robustness checks being considered. The contribution of this research outlines the key role of state-owned capital in alleviating financial constraints and attracting talent to promote POEs’ green innovation.