ABSTRACT This study investigates the relationship between government transparency and firm innovation, exploring the mechanisms through which government transparency influences firm innovation using Chinese provincial-level and firm-level data from 2013 to 2020. The findings reveal a significant positive association between government transparency and both firm innovation input and output. Mechanism analysis suggests that government transparency enhances firm innovation by fostering improvements in the regional institutional environment. Furthermore, the study identifies heterogeneity in the effects, indicating that state-owned enterprises (SOEs) and high-tech firms derive greater benefits from government transparency. This research contributes to the existing literature by addressing the role of government transparency in promoting firm innovation and offers valuable insights for practical applications.