Abstract: Environmental regulation is a pivotal tool for advancing sustainable development in river basins, enabling green economic transition, and supporting China's “Dual Carbon” goals. Based on provincial panel data (2011-2022) from the Yellow River and Yangtze River basins, this study constructs fixed-effects and moderating-effect models to analyze the nonlinear impact of environmental regulation on green development. The results indicate an inverted U-shaped relationship between environmental regulation and green development. Innovation capacity accelerates the inflection point and exhibits significant spatiotemporal heterogeneity. Prior to the “Dual Carbon” initiative, diminishing marginal effects hindered green development under stringent regulation; afterward, the synergy between innovation and regulation shifted toward positive reinforcement. The Yellow River Basin demonstrates an inverted U-shaped pattern, where high-intensity regulation coupled with strong innovation capacity exacerbates diminishing returns. Conversely, the Yangtze River Basin shows no significant correlation, driven by endogenous innovation. The study recommends dynamic regulatory assessment mechanisms, optimized innovation environment, and coordinated governance integrating government-market collaboration with regional adaptability.