Digital inclusive finance promotes the improvement of green total factor productivity by promoting financial market efficiency to improve factor allocation distortions situation. Using the panel data of 285 prefecture-level cities in China from 2011 to 2017, this paper empirically analyzes the effect and transmission mechanism of digital financial inclusion on green total factors by using the mediating effect model and introducing the distortion index of labor and capital factor allocation. The results show that the development of digital financial inclusion reduces the degree of factor distortions, and the improvement of factor distortions is significantly conducive to the improvement of green total factor productivity. Compared with the digitalization degree, the coverage breadth and use depth of digital inclusive finance have a more significant effect on improving green total factor productivity. Compared with central and west areas and middle-sized and small cities, the effect of digital inclusive finance development - factor distortion improvement - green total factor productivity improvement is more significant in the eastern region and big cities. Therefore, with resources and environment increasingly becoming the rigid constraint of economic growth, China should vigorously promote digital inclusive finance, boost the free flow and effective integration of capital and labor factors, so as to achieve the coordinated development of digital inclusive finance and green total factor productivity.