The development of circular economy is an important way to achieve China's "double carbon" goal and solve ecological and environmental problems. Green finance is an important tool and means to promote the development of circular economy. Based on provincial panel data from 2009 to 2021, the direct and indirect impacts of green finance on the development of circular economy are empirically analyzed by using the fixed effect model and the mediating effect model, and the nonlinear impact of green finance on the development of circular economy is further explored by using the threshold effect model. The results show that green finance significantly promotes the development of circular economy, and after a series of robustness tests, the conclusion is still valid. In terms of mediating effect, green finance promotes the development of circular economy by curbing carbon emissions. In terms of threshold effect, the impact of green finance on the development of circular economy has a double threshold effect of economic development level. When the level of economic development crosses a certain threshold, the impact of green finance on the development of circular economy shows a trend of "increasing marginal effect".