Urban renewal, as a critical strategic initiative for optimizing urban spatial structures and reshaping regional industrial functions in the era of urban redevelopment, can stimulate the vitality of microeconomic actors and foster enterprise innovation through the reconstruction of urban spatial configurations and industrial ecosystems. This study uses a sample of 4088 Chinese A-share-listed firms spanning 2009 to 2023 to empirically examine the impact of urban renewal on corporate innovation and the underlying mechanisms. The results indicate that urban renewal significantly enhances firms’ innovation performance, and this finding remains robust across a series of robustness tests. Furthermore, the positive effect of urban renewal is more pronounced among state-owned enterprises, firms located southeast of the Hu Huanyong Line, firms facing greater financing constraints, and firms operating in industries characterized by rapid technological change. Mechanism analyses reveal that urban renewal promotes corporate innovation by increasing firms’ innovation investment and accelerating the agglomeration of highly skilled talent, thereby generating innovation momentum through the dual channels of stimulating demand-side consumption scenarios and empowering supply-side talent. The findings suggest that the continuous improvement of corporate innovation capability requires full utilization of the policy guidance, platform coordination, and infrastructure-support functions of urban renewal, complemented by differentiated policy implementation and institutional safeguards.