Intellectual property (IP) protection constitutes a fundamental institutional safeguard for firm-level digitalization and high-quality economic development. Using the establishment of National Intellectual Property Demonstration Cities (NIPDC) as a quasi-natural experiment, this paper constructs a multi-period difference-in-differences model to empirically examine the impact of enhanced IP protection on firms’digitalization. The results show that NIPDC significantly promotes firm-level digitalization, and this baseline conclusion remains robust after a series of endogeneity and robustness checks. Mechanism analyses reveal that strengthened IP protection alleviates financing constraints and effectively stimulates firms’digital innovation, thereby facilitating endogenous digitalization. Moreover, strengthened IP protection fosters the agglomeration of digital service providers, expanding exogenous channels for firms’digitalization and further improving their digitalization level. Heterogeneity analyses indicate that the promoting effect is more pronounced for digital follower firms, firms with digitally skilled executives, firms with lower patent density, and firms located in cities with lower degrees of marketization. This study expands the understanding of the channels enabling firms’digital transformation and delivers useful policy implications for strengthening IP governance and promoting enterprise digitalization.