The digital economy (DE), characterized by the fusion of financial and technological elements, offers novel avenues for promoting environmental sustainability. This research investigates the impact of DE on air quality within the framework of the ‘Broadband China’ initiative, employing a natural experiment methodology. Utilizing a difference-in-differences approach, we demonstrate that DE effectively ameliorates air quality, evidenced explicitly by significant reductions in PM2.5 concentration and the Air Quality Index (AQI), with a cumulative effect that is particularly pronounced in regions boasting robust innovation ecosystems, high population density, and diverse industrial landscapes. Furthermore, the study also reveals the crucial role of green innovation in this process by promoting the innovation of clean and environmental protection technologies to improve air quality. In addition, indirect mechanisms such as energy structure optimization, industrial restructuring, and green finance support are identified in this study, which further promote environmental sustainability by promoting the development of environmentally friendly industries and enhancing the efficiency of environmental regulation. These findings confirm the potential of DE in environmental governance and sustainable development and provide an empirical basis for policymakers to strengthen the integration of DE and environmental protection through circular economy principles and green finance incentives.