The Internet has played an important role in reshaping economic geography, and the way it affects the economic layout within cities deserves further exploration. The study theoretically deduces the intrinsic mechanism by which the Internet reshapes the internal economic layout of cities, introducing it into the enterprise location choice model of monocentric cities. It then empirically examines the impact and mechanism of the Internet on the decentralization of Chinese cities by using multi-source microdata, such as nighttime lighting data, industrial and commercial business registration data, and industrial enterprise data. It is found that the Internet can significantly contribute to the decentralized layout of cities. Mechanism tests show that the Internet promotes the decentralized layout of urban economic activities by influencing enterprise location, strengthens the agglomeration power of urban centers by lowering the labor costs of enterprises in the central city, and expands the decentralization power of urban centers by lowering the management costs and transaction costs of enterprises. Further research found that the Internet has facilitated the formation of polycentric spatial structures in cities while promoting urban decentralization.