How Do Innovation-Driven Policies Affect Urban Green Land Use Efficiency? Evidence from China’s Innovative City Pilot Policy

China has already joined the ranks of innovative nations. Accelerating technological innovation to lead a green transformation in land use is an urgent requirement for promoting ecological civilization and, in turn, driving high-quality economic development. This study examines urban data spanning from 2006 to 2021, focusing on cities classified at the prefecture level or above. Employing the Chinese Innovative City Pilot Policy (ICPP) as a quasi-natural experiment, this study utilizes a super-efficiency Slack-Based Measure (SBM) model that incorporates undesirable outputs to assess Green Land Use Efficiency (GLUE). Additionally, a multi-period Difference-in-Differences (DID) model, combined with a mediation effect model, is employed to evaluate the influence of innovation-driven policies on GLUE. The findings are as follows: (1) Although GLUE showed variability throughout the study period, it generally trended upwards, with significant improvements noted in the eastern regions and coastal city clusters. (2) Innovation-driven policies have effectively enhanced urban GLUE, a conclusion supported by extensive robustness tests. (3) The heterogeneity investigation indicates that the ICPP’s impact on GLUE is more significant in cities with advantageous geographic locations, increased environmental awareness, and strong market potential. (4) A mechanism analysis demonstrates that the ICPP positively influences GLUE by reducing urban sprawl and promoting the concentration of digital service industries. Based on these results, this study proposes policy recommendations aimed at refining innovation-driven approaches to improve urban GLUE. These recommendations are pivotal in promoting a green, low-carbon transformation in China’s economic and social development.