Based on the background of mixed ownership reform of SOEs， SOEs in the Yangtze River Delta region from 2015—2020 were selected as the research sample and regression analysis was conducted using the mixed OLS model to study the effect of institutional shareholding on the financial performance of SOEs under the influence of internal control. The results show that： institutional shareholding improves SOEs'' financial performance， internal control of SOEs becomes better as the proportion of institutional shareholding increases， and internal control plays a mediating role between institutional shareholding and SOEs'' financial performance； when further studying the heterogeneity of institutional investors， we found that the introduction of institutional investors in securities funds produces the best results. Based on this， three suggestions are proposed that SOEs need to value the introduction of institutional investors while improving their own internal control， which provide a reference for an in-depth study of SOEs'' mixed ownership reform.