Abstract Understanding how digital transformation policies influence urban ecological outcomes remains a pressing yet underexplored question in sustainability science. Using panel data from 213 Chinese cities between 2011 and 2023, this study estimates the causal effect of China’s Smart City Pilot Policy (SCPP) on urban ecological welfare (UEW). Leveraging quasi-natural experimental methods—including difference-in-differences, PSM-DID, and synthetic control—we find that the SCPP significantly improves UEW by enhancing digital infrastructure, fostering greener industrial structures, and boosting public investment in science and innovation. The policy’s benefits are more pronounced in cities with higher administrative ranks, stronger ecological resilience, and greater resource endowment. These results reveal that uniform digital urban strategies may be suboptimal. Instead, differentiated approaches tailored to local ecological and institutional capacities can amplify the green dividends of digital transformation, advancing more equitable and sustainable urban futures. Similar content being viewed by others Acknowledgements This study was supported by the Shandong Province Science and Technology Talent Support Project (Grant No. SDAST2025QTB017). Author information Authors and Affiliations Corresponding author Ethics declarations Competing interests The authors declare no competing interests. Additional information Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Supplementary information Rights and permissions Open Access This article is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License, which permits any non-commercial use, sharing, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if you modified the licensed material. You do not have permission under this licence to share adapted material derived from this article or parts of it. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in