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Environmental pollution has become a pressing global issue, severely threatening human health and ecosystems. As an emerging driver of economic development in countries worldwide, the digital economy (DE) has the potential to enhance resource utilization efficiency and promote the development of clean technologies, thereby reducing environmental pollution. Based on the panel data of 267 cities in China from 2012 to 2021, the spatial econometric model is used to test the impact of DE on environmental pollution. The mediating effect model is used to explore the transmission mechanism of DE affecting environmental pollution. The panel threshold model is used to examine the threshold effect of marketization. The results are as follows: (1) DE can significantly reduce environmental pollution. The conclusion is still valid after conducting robustness tests such as selecting historical data as instrumental variables and the "Broadband China" pilot as a quasi-natural experiment. (2) From the perspective of transmission mechanism, DE can reduce environmental pollution through green technology innovation and industrial structure upgrading. (3) From the perspective of spatial spillover effect, DE can reduce the environmental pollution level of surrounding cities. (4) From the perspective of threshold effect, DE has obvious market-oriented single threshold effect on environmental pollution. When the marketization level crosses the threshold of 11.6611, the emission reduction effect of DE is significant. (5) From the perspective of heterogeneity, DE has a heterogeneous impact on environmental pollution in cities with different geographic locations, resource endowments and administrative level. Regarding geographical heterogeneity, DE can effectively reduce environmental pollution in eastern and central regions, but has no significant impact on environmental pollution in western regions. Regarding the heterogeneity of resource endowment, compared to non-resource-based cities, resource-based cities suffer more from the negative effects of DE on their environment. Regarding the heterogeneity of administrative levels, compared with non-central cities, the DE of central cities has a greater emission reduction effect. Based on empirical results, this paper proposes strategic recommendations in areas such as enhancing the application of DE in emission reduction, upgrading industrial structures, promoting green technology innovation, and improving the level of marketization. This study not only enriches the research of DE and environmental pollution, but also provides a reference for the formulation of environmental pollution control policies. [ABSTRACT FROM AUTHOR]