<p>Amid the booming development of artificial intelligence (AI) and vigorous green transformation, the influence of AI development on industrial green transformation and its mechanisms requires scientific attention. Utilising a comprehensive set of panel data from 283 prefecture-level cities and above in China from 2004 to 2023, this study methodically examines the direction, mechanisms, heterogeneity characteristics, and spatial effects of AI’s impact on industrial green transformation. Results demonstrate that AI development has a significant potential to drive industrial green transformation. This driving effect is primarily manifested through the facilitation of green technological progress and the promotion of economic agglomeration; however, the anticipated channel of energy intensity reduction has not yet been substantiated. Notably, the driving effect of AI exhibits multidimensional heterogeneity, with more pronounced effects in coastal regions, non-resource-based cities, and urban agglomerations. In addition, the investigation reveals that AI development exerts significant positive effects on industrial green transformation within local cities while concurrently exerting negative spatial spillover effects on the industrial green transformation of neighbouring cities. These findings contribute to a more comprehensive theoretical framework and empirical evidence on AI-driven ecological modernisation and offer valuable policy implications for emerging economies seeking to accelerate industrial green transformation through AI technologies.</p>