Breakthrough innovation is the strategic cornerstone for cultivating new quality productive forces and achieving China's high level of self-reliance and strength in science and technology. By driving disruptive changes in organizational practices, enterprise digital transformation can lead to new organizational conditions and windows of opportunity for breakthrough innovation. Based on dynamic capability theory, this paper empirically examines the effect and mechanism of digital transformation on Chinese enterprises' breakthrough innovation based on the comprehensive measurement of the breakthrough innovation index of Chinese enterprises using a novel patent’s abstract text similarity algorithm. The study results show that (1) digital transformation can significantly increase the level of breakthrough innovation in enterprises. (2) Dynamic capabilities shaped by the organization's capability to sense, seize, and transform are important channels through which digital transformation fosters breakthrough innovation in enterprises. (3) Heterogeneity analysis reveals that digital transformation has a stronger incentive effect on breakthrough innovation for large firms, private firms, and firms operating in dynamic environments; furthermore, artificial intelligence, as a type of "invention of invention," is better at empowering breakthrough innovation in enterprises than the types of digital technology applications such as big data, IoT, and cloud computing. (4) Digital transformation can further enhance enterprises' total factor productivity by enhancing their breakthrough innovation capabilities. This paper reveals the black box of the organizational process of digital transformation that enables breakthrough innovation in enterprises and provides an important practical path for Chinese enterprises to tackle key core technical issues of "stuck neck."