["Review of Development Economics, EarlyView. ", "\nABSTRACT\nWith the rapid advancement of information technology, the digital economy has emerged as a new driving force for promoting global sustainable development. This paper explores the impact of digital technology on national sustainable development and its underlying mechanisms using panel data from 153 countries over the 2009–2022. The findings indicate that the digital economy significantly promotes SDI and is particularly effective in mitigating environmental impact. The digital economy promotes SDI by reducing dependence on natural resources, driving industrial upgrading, and enhancing green innovation capabilities. Moreover, the spatial spillover effects of the digital economy enhance the sustainability of both local and neighboring economies. Its impact on sustainable development exhibits a nonlinear pattern, where the deepening of the digital economy, industrial structural upgrading, and improvements in institutional quality further amplify its positive influence on sustainability. Heterogeneity analysis indicates that this impact is particularly significant in Asian and European regions as well as in low‐energy‐consumption economies. This paper not only enriches the theoretical cognition of the relationship between the digital economy and sustainable development but also provides practical guidance for countries in formulating digital economy policies and advancing sustainable development goals.\n"]