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Amid global climate imperatives and intensified economic competition, pivoting from China's conventional growth paradigms to innovative economic catalysts emerges as pivotal for its transformative agenda. Drawing on panel data from 141 principal urban conglomerates spanning 2011–2021, this investigation delves into the intricate nexus between the digital economy and carbon total factor productivity. Our empirical analysis unveils a U-shaped trajectory characterizing the digital economy - carbon total factor productivity interplay, accompanied by a congruent spatial spillover dynamic. While digital economy fortifies environmental governance mechanisms through amplified data and media channels, such regulatory frameworks, albeit efficacious in emission abatement, may inadvertently impede economic vitality, thus attenuating carbon total factor productivity. Progressing from digital economy's foundational phase to its comprehensive deployment, its reverberations on capital productivity manifest in a U-shaped curve, invigorating local carbon total factor productivity while potentially undermining adjacent regions. This digital economy - carbon total factor productivity interrelation is accentuated in advanced, non-resource-reliant metropolises with subdued innovation propensities. This discourse proffers nuanced policy implications for sculpting digital economy trajectories and bolstering carbon total factor productivity in a sustainable context. [Display omitted] • The digital economy demonstrates a U-shaped spatial spillover impact on carbon total factor productivity. • The digital economy influences carbon total factor productivity through governmental environmental regulations. • The digital economy influences carbon total factor productivity through capital productivity. [ABSTRACT FROM AUTHOR]