To clarify the relationship between haze management competition and industrial green transformation, this paper is based on the theoretical perspectives of local government competition and environmental federalism, the specific form of haze governance competition is analyzed by applying the two-region spatial Durbin model, and then the impact of haze governance competition on industrial green transformation and its transmission mechanism is explored by constructing a spatial panel linkage model and adopting the generalized spatial three-stage least squares method. The empirical results show that, with the profound changes in the performance appraisal system since the 18th National Congress, the interaction of environmental governance strategies between geographically adjacent provinces is imitative. In contrast, that which is between economically adjacent provinces is a “race to the top”, and haze governance is conducive to promoting the development of industrial green transformation. Further research found that the competition of haze governance is heterogeneous, and smog control in the eastern region contributes to the green transformation of local industries, while smog control in the central and western regions inhibits their industrial green transformation, and haze governance mainly enhances industrial green transformation through the innovation compensation effect, the human capital effect, and the industrial structure optimization effect. Therefore, the central government should carry out overall planning for the industry, and local governments should strengthen the joint prevention and control of haze and promote technological innovation, to improve environmental quality and realize high-quality economic development.