Abstract: Using the data of A-share manufacturing companies listed in Shanghai and Shenzhen from 2010 to 2021, this paper empirically examines the relationship between government innovation subsidies and enterprise innovation, multi-dimensionally examines the moderating effect of internal pay gap on the relationship between government innovation subsidies and enterprise innovation, and further explores the mediating effect of financing constraints between the two. The study shows that government innovation subsidies can promote firms’ innovation enhancement, and the above relationship is negatively moderated by the internal pay gap; in terms of innovation inputs, financing constraints play a partial mediating role in the impact of innovation subsidies on firms' innovation. Further research also finds that the moderating role of the internal pay gap is not constant, but will be affected and constrained by internal and external environmental factors of firms such as the degree of financialization and the level of marketization.