Data elements contain great use value and potential and need to be deeply processed and circulated in the market to fulfill their value-creating role. In our study, we employ a sample comprising Chinese A-share listed companies for the period from 2012 to 2022. Taking the establishment of data trading organizations as an exogenous shock, it empirically examines the impact of the allocation of data elements through market mechanisms on corporate green innovation by constructing a multi-period DID model. The empirical results found that the allocation of data elements through market mechanisms can play the transaction cost-saving effect and capital factor agglomeration effect to promote enterprise green innovation. Meanwhile, the heterogeneity analyses reveal that market-based data resource allocation has a greater impact on green innovation for firms located in regions with advanced factor markets and robust intellectual property protection, as well as for larger firms and those operating in less competitive industries. This study enriches the research related to the impact of market allocation of data, a new type of production factor, on green innovation in enterprises and provides new evidence at the microdata level for achieving sustainable economic and social development.