To comprehensively examine the economic consequences and value effects of industrial transfer, this article takes the policy of national demonstration zones for undertaking industrial transfer as a quasi natural experiment, combines 293 prefecture level cities in China from 2008 to 2022, and focuses on panel data from the Sichuan Chongqing region as the research object. The progressive difference in differences model is used to evaluate the technological innovation effect in industrial transfer.Research has shown that the establishment of national level demonstration zones for industrial transfer has significantly improved the technological innovation level of local enterprises. After a series of robustness tests, this conclusion still holds true. Furthermore, in the Sichuan Chongqing region, due to its strong industrial foundation and complete range of industries, the positive effects of industrial transfer are particularly prominent. Industrial transfer not only enhances the overall innovation level of local enterprises, but also improves the overall innovation quality. This article also conducts an in-depth comparative analysis of the impact of market segmentation on enterprises’ technological innovation. The study reveals that when the degree of market segmentation is high, it weakens the influence of industrial transfer on enterprises’ technological innovation. This effect is more pronounced in the Sichuan-Chongqing region, which may be attributed to the relatively unique geographical and economic development characteristics of the western region. Finally, the specific impact mechanism of industrial transfer is analyzed, and it is found that industrial transfer can effectively enhance the level of industrial agglomeration in the destination area and reduce the degree of market factor mismatch, thereby creating better conditions for enterprise innovation. This article provides empirical evidence for understanding the technological innovation effects and impact mechanisms of industrial transfer in China and offers optimization strategies for the construction path of a high-quality strategic hinterland in the Sichuan-Chongqing region.