<p>Digitalization and intelligent integration, upgrading, and reconfiguration, collectively termed “digital-intelligent transformation,” represent a novel organizational form that advances urban sustainable development. In this context, China’s National AI Innovation Pilot Zone (NAIIPZ) policy serves as a significant policy instrument. This study investigates 279 cities in China from 2010 to 2022, employing a multi-period difference-in-differences (DID). The findings confirm that UDIT effectively advances urban sustainability. This improvement is mainly driven by enhanced urban innovation capacity and industrial structure upgrades. Additionally, moderation analysis shows that both market-based and command-and-control environmental regulations strengthen the positive effect. Spatially, influence varies with distance, displaying a pattern where the impact initially declines before increasing as spatial distance grows. Regionally, western and northern areas see stronger gains, with varying effects across different city sizes. As a representative initiative of the UDIT 3.0 + stage, NAIIPZ contributes to promoting sustainable development and enriches the research on urban sustainability in the AI era.</p>