<p>The omnipresence of global forces and rapid technological advancements is shaping the behavior of SMEs as they increasingly adopt intelligent manufacturing to achieve sustainable goals. Despite their efforts, manufacturing SMEs in China are facing complex challenges while striving to maintain sustainable performance and promote green, ambidextrous innovation. These stumbling blocks create further challenges due to resource paucity and other related barriers. Nevertheless, an academic exploration of the factors that influence green ambidextrous innovation is warranted, mainly through the prism of Chinese manufacturing SMEs. Therefore, the present study is about how SMEs can benefit from green knowledge capabilities in balancing the exploration and exploitation of ambidextrous green innovation. The analysis is further augmented by incorporating green entrepreneurial intention as a mediator and digital financial literacy as a moderator. The data was obtained from 211 manufacturing SMEs in China through an email survey and analyzed using PLS-SEM. Findings reveal that green knowledge capabilities improve the green entrepreneurial intentions of SMEs to pursue ambidextrous green innovation. Results also confirm the role of digital financial literacy in enhancing green entrepreneurial intentions and fostering ambidextrous green innovation. The relationship is stronger for firms with high digital financial literacy and weaker for those with low digital financial literacy. Findings confirm that green entrepreneurial intentions serve as a prerequisite for firms to adopt environmental management plans, reflecting the firm’s commitment to green initiatives, proactiveness, and risk-taking.</p>