Green innovation serves as a powerful technological pillar for advancing green and low-carbon development. A green innovation decision-making model for enterprises from the perspective of agglomeration is constructed to analyze the mechanism of the impact of manufacturing agglomeration on the green innovation ability of enterprises. Meanwhile, using the data of 1,941 manufacturing listed companies on the Shanghai and Shenzhen A-share markets, the fixed effect model is adopted to empirically test the nonlinear relationship between manufacturing agglomeration and enterprise green innovation. The research finds that manufacturing agglomeration has a “first rise and then decline” nonlinear impact on enterprise green innovation. The mechanism analysis shows that manufacturing agglomeration can affect green innovation by influencing enterprise’s environmental awareness, financing constraints, and knowledge spillover. The heterogeneity analysis indicates that due to the differences in the quality of green patents, the carbon dioxide intensity of industry, and the dependence on natural resources in the region, the relationship between the two varies. Compared with excessive agglomeration regions, moderate agglomeration regions’ enterprise green innovation can help increase the economic value of enterprises and reduce urban carbon emissions, which is more conducive to achieving the “Carbon Peak and Neutrality” goal. The relevant research provides empirical evidence and policy suggestions for better leveraging the green innovation effect of manufacturing agglomeration on enterprises and promoting the realization of the “Carbon Peak and Carbon Neutrality” goals.