Institutions are regarded as antecedent conditions that shape technological innovation. This study examines firm innovation activities in the space sector, with particular attention to institutional opening in this field. Drawing on the technology-organization-environment framework, it develops an analytical model comprising six major effects. By exploiting reforms in market access regulation in the space sector, we employ a causal forest approach to estimate the impact of space commercialization on firms’ digital technology innovation. The findings indicate that institutional opening significantly enhances firms’ digital technology innovation, and that this effect is more pronounced among large state-owned enterprises. The underlying mechanisms can be understood along three dimensions. First, at the technological level, space commercialization advances digital technology innovation through knowledge integration and digital transformation effects. Second, at the organizational level, it induces firms to pursue digital technology innovation through heightened operational pressure, while also generating a financing expansion effect. Third, at the environmental level, it generates an industry competition effect that accelerates digital technology innovation, although the policy support effect is not strengthened. This study provides empirical evidence on the internal logic through which institutional opening shapes technological innovation under mission-oriented innovation policy, offering valuable implications for governments seeking to refine market mechanisms, as well as for firms aiming to seize the window of opportunity.