The global economy is undergoing a transformative shift propelled by continuous technological advancements. This digital revolution has ushered in a new era characterized by the pervasive influence of the digital economy. Notably, the inherent “green” attributes of the digital economy, such as reduced marginal costs and diminished environmental impact, have injected fresh momentum into the green transformation of the industrial sector. Using spatial econometric model, we examine the impact of the digital economy on the green transformation of the manufacturing industry using panel data for 283 prefecture-level Chinese cities from 2011 to 2019. We first calculate the level of the manufacturing industry’s green transformation in this paper according to the Slack-Based Measure model. The green transformation of the industrial sector is facilitated by the digital economy in both the eastern and central regions, as revealed by heterogeneity analysis based on geographical areas. The moderating effect analysis reveals a distinct negative moderating impact of industrial structure upgrading and industrial agglomeration. Additionally, the threshold effect tests indicate significant nonlinear features in the influence of industrial structure upgrading on the green transformation of the manufacturing industry.