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Amidst the framework of dual circulation, innovation emerges as a pivotal strategy for realizing high-quality economic development. Concurrently, digital finance, serving as a potent complement to traditional financial systems, significantly influences regional innovation enhancement. This research employs a spatial panel methodology to thoroughly investigate the inherent mechanisms through which digital finance development shapes regional innovation. Empirical testing is conducted using panel data derived from 283 mainland Chinese prefecture-level cities spanning from 2013 to 2020. The findings underscore that digital inclusive finance plays a crucial role in amplifying regional innovation output, unveiling a distinct spatial impact on innovation. The progression of each facet of digital finance contributes to mitigating supply-side financing constraints, thereby directly fostering heightened regional innovation. The study delves into a Chinese regional sub-sample, revealing a prevalent driving effect with conspicuous heterogeneity across the major regions--East. Central. West. As scientific and technological innovation stands as the primary driving force, its profound interplay with the evolution of financial inclusion in China is evident. This study provides valuable insights to fortify regional modernization efforts and serves as a reference for policymakers and researchers navigating the complex intersection of finance and innovation in the Chinese context. [ABSTRACT FROM AUTHOR]