With the continuous intensification of competition among major countries and the resurgence of anti-globalization trends, countries around the world have strengthened their strategic deployment for digital transformation in the manufacturing industry. Digital development enables enterprises to transform and upgrade, and the digital transformation and green transformation of enterprises have a historic intersection. This study uses the panel data of 1900 A-share listed companies to explain the theoretical mechanism of digital transformation to promote carbon emission reduction from the perspective of green technology progress. In addition, the threshold model is used to analyze the nonlinear relationship. The results show that the digital transformation has significantly reduced the carbon emission level of Chinese manufacturing enterprises, and the conclusion is still true after the instrumental variable estimation and robustness test. Heterogeneity analysis found that the carbon emission reduction in state-owned enterprises is more obvious. Green technology innovation capability shows the technology dividend effect, which is an important way for digital transformation to promote carbon emission reduction. This study expands the research on the sustainable development of China’s manufacturing industry and provides guidance for policy makers and business decision makers.