Green technology innovation (GTI) is critical for economic development and environmental protection. This paper investigates the influence of the National E-commerce Demonstration Cities (NEDC) policy on GTI using a multi-period Difference-in-Difference (DID) model and data from prefecture-level Chinese cities. The findings indicate that the NEDC policy considerably facilitates GTI in China. The conclusion withstands a comprehensive set of robustness tests and remains valid even after considering potential endogeneity issues. A dynamic analysis reveals an increasing influence of the NEDC policy on GTI over time. The paper identifies producer services agglomeration, internet development, and financial support as channels through which the NEDC policy affects GTI. A heterogeneity analysis demonstrates that the NEDC policy’s influence on GTI is more pronounced in larger cities with a higher degree of marketization and increased levels of human capital. Moreover, the NEDC policy exhibits spatial spillover effects, supporting GTI advancement in both local cities and neighboring regions. This study provides insights into how emerging market economies can leverage e-commerce for green development.