Amid growing environmental and resource constraints, green development has become a strategic priority for national and governmental progress. Green innovation is increasingly recognized as vital for companies aiming to achieve sustainability and meet carbon peak and neutrality goals. This study, based on data from Shanghai and Shenzhen A-share listed companies (2010–2021), investigates the impact of small and medium investors’ (SMIs) green attention on corporate green innovation. Results indicate that SMIs’ green attention significantly enhances both substantive and strategic green innovation, with a stronger effect on substantive innovation. These findings remain robust across various tests. Heterogeneity analysis shows that SMIs’ green attention has a more significant impact on state-owned enterprises, non-high-tech firms, and non-heavily polluting companies. In terms of governance, the effect is stronger in firms with environmentally conscious executives, low media attention, and a high proportion of institutional investors. This study categorizes corporate green innovation by motivation, offering a deeper understanding of the concept, and highlights how SMIs’ attention drives innovation. The findings provide valuable insights for companies aiming to attract environmentally conscious investors and foster green innovation.