China has witnessed rapid development in green industries over the past two decades, with foreign direct investment playing an important role in bringing cutting-edge green technologies to Chinese domestic firms. However, accurately estimating the contributions of FDI to green knowledge spillovers becomes challenging without distinguishing whether an FDI involves environmentally-friendly commercial activities, i.e., green FDI. Using a new dataset that provides comprehensive coverage and detailed information on FDI activities in China, this paper develops four new definitions of green FDI by text-mining business descriptions and tracking patenting activities of foreign-invested firms. I identify the impacts of knowledge stocks resulting from green FDI firms on domestic firms’ green innovation using Chinese firm-level data, along with an instrumental variable based on the changes in China’s FDI opening-up policy. The results show no impact of green FDI firms’ knowledge stocks on domestic firms’ green innovation when green FDI firms operate within the same industry as domestic firms. In contrast, I find that a 1% increase in knowledge stocks resulting from green FDI firms in downstream industries contributes to a roughly 0.732% increase in green patenting activities of domestic firms. This knowledge spillover effect from downstream green FDI is more pronounced on domestic high-quality green innovation. Further investigation into the factors influencing green FDI knowledge spillovers reveals that the location of green FDI firms, technological proximity between industries, and environmental regulation stringency of green FDI origins contribute to the varying strength of the knowledge spillovers from downstream green FDI.