Green finance has become an important tool for the low-carbon development in China. This research constructs a comprehensive indicator system, and carefully describes the spatial characteristics of green finance and carbon emissions in China from 2012 to 2021. Then, the dynamic SDM and the mediating effect model are used to explore the spatial spillover effect, the mechanism and the heterogeneity. The research finds that carbon emission levels are generally higher in the north of China, and the level of green finance shows a spatial distribution of high in the east and low in the west. Moreover, green finance can significantly reduce carbon emissions in the presence of spatial spillovers with heterogeneity. For 1% increase in green finance within the region, per capita carbon emissions are reduced by 0.68% in the short term and 0.60% in the long term, and by 0.75% in the short term and 0.33% in the long term in the surrounding areas. In addition, green technology innovation has become an important way for green finance to boost low-carbon development.