Abstract: Maintaining a high quality of water environment is an inevitable requirement for regional integration. The Yangtze River Delta (YRD), one of China's most populous and economically vibrant areas, has raised the bar for aquatic environment management in order to meet the demands of high-quality growth and regional integration. Green finance is an important tool to promote environmental governance. Based on the panel data of 41 cities in China's YRD region from 2011 to 2020, this paper applied the fixed-effects model and the spatial Durbin model to examine the water and environmental governance effects of green finance. It is found that: (1) the development of green finance had a significant positive effect on water environment governance in the region. The relationship between the two remained significant according to the endogeneity exploration and multiple robustness tests. (2) The governance effect of green finance on the water environment was characterized by significant heterogeneity. Cities with high levels of science and technology, economic development, and urbanization had more significant water environment and governance effects from green finance. (3) Green finance can promote water environment management through the mechanisms of industrial structure upgrading, green science and technology innovation, and government environmental governance.(4) Green finance was not always effective in the management of water pollution, and green finance did not show significant beneficial effects on the management of the water environment outside the region, and even the spatial spillover effect was negative and significant. Accordingly, policy recommendations were proposed in terms of encouraging the development of green finance, promoting cross-regional linkages between green finance and water pollution control, and encouraging technological innovation and the development of green industries.