Abstract:Enhancing digital governance capabilities constitutes a pivotal approach to advancing the modernization of China’s governance system and capacity. Based on transaction cost theory , real options theory and signaling theory , the theoretical logic and mechanisms through which government digital governance influences urban innovation were clarified. Employing the“national information benefiting people pilot” policy as an exogenous shock , a difference-in-differences model was utilized for empirical testing. The findings reveal that digital governance significantly promotes urban innovation , a result that holds after a series of robustness tests. Moderation mechanism analysis demonstrates that the innovation enhancing effects of digital governance are more pronounced in regions with higher information integration capacity and information transparency , indicating that digital governance facilitates information aggregation and disclosure , thereby fostering urban innovation. Mediating mechanism tests reveal that the government's digital governance have enhanced the emphasis on innovation and increased support for research and development , thereby elevating the city's innovation level. Heterogeneity analysis conduct within the“effective market , proactive government , and robust rule-of-law” framework reveals stronger innovation effects in regions with : higher marketization levels , stricter intellectual property protection , greater human capital endowment , and strategic innovation contexts. These findings enrich the theoretical framework of digital governance's impact on urban innovation , providing novel mechanistic insights , empirical evidence , and practical rationale for understanding how digital governance drives urban innovation.