Green innovation is integral to the high-quality economic and social development in China. Private enterprises, as pivotal agents of green innovation, still face problems such as weak willingness and low quality. The deepening of the mixed-ownership reform allows state capital to participate in private enterprises, thereby bringing institutional pressure to these enterprises. Based on the institutional theory, this paper empirically investigates the impact of state capital participation, known as the “reverse mixed-ownership reform”, on the green innovation of China’s listed private enterprises from 2007 to 2020. The results show that the “reverse mixed-ownership reform” fosters the substantive green innovation of private enterprises. Further analysis discovers that the “reverse mixed-ownership reform” promotes the substantive green innovation of private enterprises by increasing their external attention and enhancing their environmental awareness. Compared with high-pollution industries, the positive correlation between the “reverse mixed-ownership reform” and the substantive green innovation of private enterprises in low-pollution industries is stronger. This paper provides new empirical evidence for the impact of the mixed-ownership reform on substantive green innovation. The conclusions offer insights for advancing the mixed-ownership reform and achieving the goals of carbon peaking and carbon neutrality.