Abstract: As a new driving force for high-quality economic development, digital economy has gradually become a key engine for promoting common prosperity in the process of China’s modernization. The characteristics of digital economy development are highly consistent with the promotion of common prosperity. And it is of great significance to explore its internal logic to guide the release of the development dividend of digital economy and accelerate the common prosperity. Using the panel data of 30 provinces in China from 2013 to 2021, this paper explores the impact of digital economy development on common prosperity from the perspective of digital economy threshold and economic growth heterogeneity. The development of digital economy has a significantly positive role in promoting common prosperity, and this conclusion is still valid under a series of robustness tests. However, with the further improvement of the digital economy to cross the threshold, the promotion effect of digital economy on common prosperity will decline step by step, showing the nonlinear characteristics of decreasing marginal utility. The mechanism test finds that technological innovation is an important mechanism for digital economy to empower common prosperity. Heterogeneity analysis shows that the promotion of digital economy on common prosperity is stronger in the provinces of the central and western regions with lower economic development level.