As a leading force in the securities market， institutional investors play an active role in improving the total factor productivity of enterprises. Based on the theoretical deduction of the relationship between institutional investors and total factor productivity，using the data of A-share listed companies in Shanghai and Shenzhen from 2009 to 2017，the paper finds that institutional shareholders have a significant role in promoting the total factor productivity of invested enterprises. And the stable institutional investors have a significantly stronger role in promoting total factor productivity than transactional institutional investors. Further research finds that stable institutional investors can increase total factor productivity by influencing financial redundancy and internal control， while transactional institutional investors have no direct impact on total factor productivity， but can promote total factor productivity by affecting internal control levels.