Overcoming the resource curse while balancing environmental protection and economic growth presents significant challenges. We developed an evaluation system to measure the green economic efficiency (GEE) of 262 cities and introduced the concept of the mineral resource curse. This study investigates both linear and non-linear relationships between mineral resource dependence (MRD) and GEE, as well as the role of green finance in this context. To address the endogeneity issue arising from the bidirectional causality between MRD and GEE, we used the interaction of relief degree of land surface and time as instrumental variables (IV). The empirical results indicate that a city’s MRD significantly inhibits GEE. Specifically, an increase in MRD hinders GEE by reducing green investment and crowding out green credit. By categorizing cities according to resource cycle theory, we found that non-resource-based and regenerative cities effectively avoided the mineral resource curse. However, resource-based, growing, mature, and declining cities did not benefit from their mineral resources. This conclusion remains robust even after changing IV and using various estimation methods such as IVTOBIT. Furthermore, this study discusses the practical effects of green finance. We found that green investment has a limited impact, failing to offset the negative influence of MRD on GEE. Under the influence of green credit, the relationship between MRD and GEE exhibits an inverted U-shape. This finding highlights the limitations of green finance policies at the municipal level in China. Overall, this study provides new evidence for improving China’s green finance system and promoting green economic development. It offers a fresh perspective for China and other developing countries in their green transformation efforts and avoidance of the mineral resource curse.