Based on the panel data of 30 provinces and cities from 2008 to 2018, the two-stage least square method of instrumental variables is used to identify the causal relationship between local government transformation and industrial green development, and the spatial simultaneous equation is used to explore the mechanism. There is a "U" relationship between government transformation and industrial green development, and there is a strong spatial correlation between them. Government transformation indirectly affects the green development of industry by promoting the upgrading of industrial structure, restraining first and then promoting the efficiency of resource allocation and green innovation ability. Strengthening the punishment of environmental dishonesty can accelerate the upgrading of industrial structure and stimulate the ability of green innovation, but it will aggravate the mismatch of resources. Strengthening the incentive of environmental protection and trustworthiness can greatly improve the companies’ willingness for innovation, but the effect is not significant in other transmission paths. Improving the awareness of environmental protection and trustworthiness will help to promote upgrading industrial structure. The research provides new ideas for accelerating the construction of social credit system and boosting the green and high-quality development of industry.