With the increasingly complex international environment, the innovation environment in which Chinese enterprises are rooted is deeply changing. Based on the entity list system of the United States, this paper systematically discusses whether and how overseas technology blockade affects the innovation quality of Chinese enterprises. Specifically, this paper takes the entity list catalog from 2004 to 2021 as the observation object, manually identifies the listed Chinese companies subject to the technological blockade of the United States, and explores the innovation quality as the entry point. The empirical test found that being included in the entity list can stimulate enterprises to carry out high-quality innovation and improve the quality of innovation. According to the mechanism test, being included in the entity list has a positive effect on the innovation quality of enterprises mainly by improving the willingness of enterprises to innovate independently, the awareness of intellectual property protection, and resource acquisition. Heterogeneity analysis shows that the effect is more obvious when the enterprise has a high density of technology elements, belongs to the key industry supported by the government, and has overseas business. The extended test shows that the impact of US sanctions on Chinese entities on the quality of innovation is different in different periods and intensities. In addition, the threshold effect test results show that there is an approximate U-shaped relationship between entity list system and innovation quality. Finally, this paper also finds that the inclusion of enterprises in the entity list also has a spillover effect, which can improve the innovation quality of other enterprises in the same industry and in the same city. The research conclusion of this paper has important theoretical and practical significance, not only provides a comprehensive and novel insight for understanding the economic effect of entity list, but also provides important micro-empirical evidence for how governments and enterprises cope with technology blockade and realize scientific and technological self-reliance.