In the backdrop of the deepening Digital China initiative and the rapid evolution of the global digital economy, the transnational operations of Chinese digital firms have created new institutional and market opportunities for innovation. From the perspective of the core industries of the digital economy, this paper uses panel data on Chinese listed digital firms from 2010 to 2023 to analysis the impact of transnational operations on innovation performance. The results show that transnational operations significantly enhance firms’ innovation performance, primarily through market expansion, human capital enhancement, and integration into global innovation networks. The innovation effect of transnational operations exhibits heterogeneity in terms of the institutional environment and development level of host countries, domestic market segmentation, as well as firms’ technological distance and scale. Moreover, cross-regional investment by digital firms in China’s central and western regions further strengthens the innovation effect of transnational operations. Overall, this study could provide policy support for promoting the development of the national innovation system and accelerating the construction of a new “dual circulation” development pattern in the digital economy era.