Digital　development　is　critical　for　achieving　coordinated　regional　economic　growth,　energy　conservation,　and　emissions　reduction,　which　makes　it　a　viable　method　for　achieving　carbon　neutrality　and　peaks.　This　study　investigates　the　impact　of　the　digital　economy　on　urban　total　factor　productivity　and　carbon　emissions,　as　well　as　its　mechanism,　from　2011　to　2019　by　developing　a　digital　economy　evaluation　index　system.　We　find　that　the　growth　of　the　digital　economy　can　increase　urban　total　factor　productivity　while　lowering　carbon　emissions　and　also　has　a　significant　spatial　spillover　effect　on　regional　economic　growth,　energy　conservation,　and　emissions　reduction.　The　main　influencing　mechanism　is　that　the　digital　economy　accelerates　marketization　by　encouraging　industrial　structure　upgrades　and　technological　progress,　which　results　in　higher　total　factor　productivity　and　lower　energy　consumption.　In　terms　of　the　spatial　distribution,　the　digital　economy　promotes　total　factor　productivity　more　in　the　central　and　western　regions　and　large　cities　and　promotes　carbon　emission　reduction　less　in　the　eastern　regions　and　smaller　cities.　The　findings　extend　the　benefits　of　the　digital　economy　beyond　economic　and　social　welfare　benefits　and　serve　as　a　model　for　achieving　a　win–win　situation　in　terms　of　both　economic　growth　and　carbon　emissions　reduction.　©　2024　Elsevier　Ltd