The purpose of this study is to examine the role of green transformational leadership (TL) that influences green product and process innovation. More specifically, drawing together from leadership and capability-based view, the present study views green dynamic capabilities (GDCs) as an important underlying mediating mechanism through which green TL prompts green innovation. It also examines the moderating role of environmental dynamism between green TL and GDCs. Data were collected from manufacturing SMEs using the convenience sampling technique at two points in time. PLS-SEM was utilised to perform the analysis. The results demonstrate that green TL has a significant direct and positive association with green product and process innovation. The results also show a positive effect of green TL on GDCs, and GDCs in turn promote green innovation. Furthermore, these findings suggest that environmental dynamism plays moderating role in the relationship between green TL and GDCs, which implies that green TL is more effective in determining GDCs under high environmental dynamism. The study contributes to theoretical and practical knowledge by elucidating the relationships among green TL and green product and process innovation, underscoring areas of managerial development that can affect sustainable product and process innovation, specifically in manufacturing SMEs industry.