Using manufacturing panel data of listed companies in Shanghai Stock Market from 2012 to 2015, this paper tested the non-linear relationship between government subsidies and firm performance. The results showed the following conclusions. There exist threshold effects of government subsidies on firm performance, and the optimal interval of government subsidies intensity ranges from 10.77% to 14.69% to effectively promote firm performance to the maximum extent. Besides, the threshold effects of government subsidies on firm performance vary across ownership. Government subsidies significantly promote the performance of state-owned enterprises, while for non-state-owned enterprises, there exist threshold effects. Finally, the paper puts forward the corresponding policy suggestions.