<p>As global climate change intensifies, the shift toward sustainable energy has become a pivotal pathway for attaining sustainable development. This paper examines how urban innovation capacity affects energy transition, with particular attention to the moderating role of climate risk. Using panel data for 273 Chinese prefecture-level cities from 2003 to 2019, three key research questions are investigated: (1) How does regional innovation capacity influence urban energy transition? (2) What are the spatial spillover effects of innovation on neighboring cities’ energy transitions? (3) How does climate risk moderate the innovation-energy transition relationship? The study employs the Dynamic Spatial Durbin Model (DSDM) to empirically evaluate these relationships, using the urban energy transition index as the dependent variable, the Index of Regional Innovation and Entrepreneurship (IRIEC) as the key independent variable, and city-level climate policy uncertainty as the moderating variable. The results reveal that urban energy transition displays pronounced temporal accumulation and spatial spillover effects (R² = 0.346—0.680). Regional innovation capacity exerts a positive direct effect on energy transition (coefficient = 0.0262, <i>p</i> &lt; 0.01), yet also generates a negative spatial spillover (coefficient = -1.362, <i>p</i> &lt; 0.01). Moreover, climate risk significantly moderates the innovation-energy transition nexus (interaction coefficient = 0.0123, <i>p</i> &lt; 0.10), indicating that higher climate risk can attenuate the beneficial influence of urban innovation on energy transition. These findings provide a scientific basis for formulating urban energy policies and underscore the necessity of incorporating both climate-risk management and innovation-driven strategies into policy design.</p>