This paper measures the sustainability of local debt using comprehensive data from prefecture-level cities. It treats the reform of local debt information disclosure under the “dual reporting” model following the implementation of the new Budget Law as a quasi-natural experiment, employing a multi-period difference-in-differences model to empirically analyze the impact and mechanisms of the enhanced transparency resulting from the reform on local debt sustainability. The study finds: First, the debt information disclosure reform based on the “dual reporting” model has a significant positive impact on local debt sustainability. Second, regarding mechanisms, the transparency improvement from the disclosure reform based on final accounts reports enhances sustainability through two channels: controlling debt scale and reducing borrowing costs. Meanwhile, the transparency enhancement from the reform based on the government comprehensive financial report strengthens sustainability by controlling debt scale and improving repayment capacity. Third, further analysis reveals that the reform of debt information disclosure based on final accounts reports focuses more on improving the utilization performance of local debt, while the reform based on comprehensive government financial reports leans towards enhancing the management performance of local debt. The conclusions of this study provide valuable recommendations for strengthening local debt information disclosure and comprehensive supervision, standardizing local government borrowing behaviors, and achieving sustainable development of local debt.