Digital transformation (DT) is critical for the survival and growth of traditional manufacturing firms, yet sustained digital advancement remains challenging, especially for Chinese private firms navigating dynamic market and institutional contexts. Existing research has largely overlooked the role of entrepreneurial mindset (EM) in driving long-term, iterative digital transformation. Based on a longitudinal case study of Wolong Group’s three waves of DT (1992-2023), this study addresses this gap by exploring how EM interacts with DT over time. This study conceptualizes digital advancement (that is, a long-term and continuous DT) as a “sustained risk-taking” process for incumbent firms and examines the mechanism of its formation through the co-evolution of EM and DT in Chinese private manufacturing firms. This study found that the DT path of traditional manufacturers unfolds in three sequential phases: Management digitalization, manufacturing process digitalization, and product/service digitalization. The EM, defined as entrepreneurs’ cognition, behaviors, and emotions toward digitalization, drives each phase of DT. In the DT process, EM evolves from “partial, poorly coordinated” to “holistic, fully integrated” states, facilitating continuous progress on the digitalization journey for traditional manufacturing firms. In addition, DT enhances firms’ market status, which in turn enriches entrepreneurs’ social networks and strengthens their EM. Taken together, the co-evolution of EM and DT is the key driving force behind digital advancement. Theoretically, these findings highlight the interaction of the three dimensions of EM and their role in promoting digital advancement and reveal the co-evolutionary mechanism between EM and DT, thereby addressing the theoretical gap from insufficient research on the role of entrepreneurs in existing DT studies. Practically, this study offers advice for both managers and government on accelerating DT by cultivating EM through cognitive development, behavioral alignment, and emotional commitment.