Based on the panel data of 30 provinces from 2007 to 2020, this study identifies the effect and mechanism of China’s Target Responsibility System of Environmental Protection (TRSEP) on pollution reduction, then analyzes its impact on green economic growth. The conclusion indicates that TRSEP can spur pollution reduction for obligatory pollutants such as SO2 and COD, which is still valid after a series of robustness tests. Specifically, China’s TRSEP can promote pollution reduction by increasing environmental protection expenditure, levying pollution fees, and strengthening environmental administrative penalties. Furthermore, heterogeneity analysis shows that the pollution reduction effect of TRSEP is more significant in regions that implemented carbon emissions trading scheme pilots. Meanwhile, the reduction effect of the TRSEP is insignificant for non-obligatory pollutants such as industrial waste gas and industrial sewage. Moreover, implementing the TRSEP is conducive to promoting green economic development. Accordingly, this study suggests that governments should gradually increase the types of pollutant constraints, promote the synergy and complementarity between different environmental policies, and combine economic incentives with administrative regulation in the process of pollution control.