In China, the digitalized economy has emerged as a pivotal driver of rejuvenating rural sectors. Nevertheless, there remains a lack of empirical data and quantitative analysis on how the digitalized economy influences rural industrial revival, particularly at the local level. This research bridges this empirical void through a panel data analysis employing dual fixed effects to investigate how digital economic transformation drives rural industrial revitalization in Hunan Province. The econometric results reveal that digitalization serves as a catalytic accelerator for rural industrial upgrading, particularly through technological diffusion effects where digital industry expansion emerges as the dominant mechanism. It facilitates the integration of sectors like agriculture, tourism, healthcare, and commerce, enhancing rural industrial structures. However, the roles of digital finance and infrastructure are less pronounced, with digital finance still underdeveloped. The study suggests that policies should focus on expanding digital financial services, promoting digital industries, and fostering cross-sector collaborations. Furthermore, improving digital literacy in rural areas is crucial for maximizing productivity gains. This study delineates the divergent efficacy of digital infrastructure deployment versus financial digitization initiatives, decoding the causal mechanisms that underpin how digital economic ecosystems stimulate sector-specific growth trajectories in rural revitalization processes.