An incentive-compatible demand response (DR) strategy is proposed for engaging spatially-coupled Internet data center (IDC) and their spatial load regulation potentials in electricity markets. First, an optimal power flow (OPF) model which considers IDC (referred to as IOPF) is proposed to coordinate IDC DRs and power system operations, in which the formulated IDC load model is compatible with the conventional OPF model. Second, the IOPF-based locational marginal price (LMP) (referred to as ILMP) is derived, which is used to analyze the impact of spatially-coupled DR options on ILMPs and the IDC DR’s clearing price. Third, IDC DR activation strategy is proposed as an extension of Net Benefit Test (NBT), where the risk of negative benefit to IDCs is derived. An IDC DR’s activation strategy is proposed based on NBT to determine whether non-zero IDC DR dispatches in IOPF are cost-effective. Last, an extra benefit redistribution mechanism is proposed to achieve the incentive-compatibility between social welfare and IDC benefit. The proposed approach is based on the Vickrey–Clarke–Groves mechanism and the contribution factor theory, where the market’s revenue adequacy is maintained, and benefits to IDCs and other customers are guaranteed. Simulation results verify the efficiency of the proposed method, implying that the proposed spatially-coupled DRs are compatible with and can enhance existing DR mechanisms.