Abstract: Under a new “dual circulation” opening to the outside world, it is of great research significance and practical value for domestic industry to achieve industrial green transformation and realize carbon peaking and carbon neutrality goals on schedule by the external advantages of overseas investment. Based on the inter provincial data from 2004 to 2019, this paper attempts to establish an index system for industrial green transformation, innovatively designs the instrumental variable concerning money supply fluctuation and modern opening history to alleviate the potential endogeneity, and systematically investigates the effect of China’s outward foreign direct investment (OFDI) on industrial green transformation. The main results show that OFDI can facilitate industrial green transformation. After utilizing the methods including the dependent variable replacement, time window shortening, sample size adjustment and control variables lagging to conduct robustness tests, the empirical result that OFDI significantly promotes industrial green transformation is still robust. Otherwise, industrial transfer, technology progress and resource shortage supplement positively regulate the impact of OFDI on industrial green transformation.