Abstract: Promoting the development of the digital economy and green sustainability is a crucial measure for achieving high-quality economic growth in China’s modernization journey. To delve into the green effects of the digital economy, with a focus on its impact on green total factor productivity (GTFP), a study was conducted using panel data from Chinese cities from 2011 to 2022. The study focused on 180 cities in the Yellow River and Yangtze River basins. The SBM-GML model and principal component analysis were employed to measure the green total factor productivity and the level of digital economic development in both basins. A two-way fixed effect model, mediation model, and threshold model were utilized to empirically examine the effects of the digital economy on GTFP in the two basins, along with its pathways of influence. The study found that the digital economy promotes GTFP in both the Yellow River and Yangtze River basins. Mechanism analysis revealed that the digital economy’s influence in the Yellow River basin is through the optimization and upgrading of the industrial structure, whereas, in the Yangtze River basin, it is through the enhancement of marketization levels. Additionally, the intensity of environmental regulation has a threshold effect on the digital economy’s impact on GTFP in both basins. When the intensity of environmental regulation surpasses the first threshold value, the empowering effect of the digital economy on GTFP strengthens; however, once it exceeds the second threshold value, the effect diminishes. Therefore, regions should focus on enhancing digital economy governance systems and institutional support, orderly advancing industrial structure upgrades and marketization levels, and formulating reasonable environmental protection policies to provide solid support for boosting GTFP and achieving high-quality economic development.