Purpose – This study aims to investigate how environmental regulation breaks the low-end knowledge lock-in of resource-based cities and promotes green technology innovation through knowledge management mechanisms, and to examine the important role of digital inclusive finance (DF) as a knowledge acquisition infrastructure. Design/methodology/approach – Drawing on dynamic knowledge management theory, this study uses a DID approach and uses panel data from 264 prefecture-level cities in China from 2014–2023, taking the Environmental Protection Tax Law (EPTL) as a quasi-natural experiment, to examine the effect of the EPTL on green technology innovation in resource-based cities, the mediating mechanisms of knowledge search and knowledge integration and the moderating mechanism of DF. Findings – The EPTL significantly promotes green technology innovation in resource-based cities, a result robust to a series of tests. Mechanism analyses reveal that the EPTL facilitates green innovation by enhancing knowledge search and knowledge integration. DF strengthens both mediating pathways. Heterogeneity analyses show that the positive effect is more pronounced in cities with weaker legal systems and those experiencing severe resource depletion. Originality/value – To the best of the authors’ knowledge, this study is among the first to conceptualize environmental regulation as a knowledge governance mechanism that breaks low-end knowledge lock-in in resource-dependent regions. It extends dynamic knowledge management theory by identifying knowledge search and integration as micro-foundations of the Porter effect, and reveals DF as a knowledge management infrastructure that lowers search costs and enhances integration efficiency.