In this paper, the STIRPAT model was developed to study the role of financial development in urban low-carbon economic transformation. The statistical analysis used data from 281 prefecturelevel cities in China from 2009 to 2019. The results show that: (1) there is a positive U-shaped nonlinear relationship between financial development and urban low-carbon economic transformation. (2) Financial development not only directly affects the transformation of the low-carbon economy, but also indirectly affects it through three transmission channels: environmental regulation, industrial structure, and urbanization. (3) The financial development itself and the level of urbanization have a threshold effect on the transformation of the low-carbon economy. Under the threshold effect of environmental regulation and industrial structure, the role of financial development in the transformation of low-carbon economies presents a process of 'first decrease and then increase'. Therefore, improving the intensity of environmental regulation, implementing differentiated financial and industrial development policies, and controlling the urbanization process are effective measures to promote the transformation of lowcarbon economies.