While a growing body of literature has examined the link between green strategy and firm performance, little attention has been paid to distinguishing short-term from long-term and effects, and the underlying mechanisms through which green strategy takes effect are also rarely discussed. This paper leverages the context of implementing a green strategy among Chinese listed companies to examine how the green strategy impacts the company’s short-term and long-term financial performance. Drawing from the resource-based view (RBV), we argue that the implementation of the green strategy facilitates the company's long-term performance but inhibits short-term performance due to the mediating effects of firms’ debt ratio. The current research makes substantial contributions to the literature and provides important implications for policymakers and firm managers.