The preservation and innovation of intangible cultural heritage are critical challenges in cultural protection. With the rapid development of artificial intelligence (AI) technology, new opportunities have emerged for safeguarding and transmitting intangible cultural heritage. As a Chinese national intangible cultural heritage, the blue printed fabric craft faces multiple challenges, including the loss of traditional techniques, shifts in aesthetic and cultural values, and concerns regarding environmental sustainability and cost. This paper explores the use of generative AI technology (AIGC) in the design of blue printed fabric patterns, aiming to generate innovative patterns that align with both traditional aesthetics and contemporary design demands. These patterns are integrated into daily life applications to promote the creative development and transformation of intangible cultural heritage. The research classifies and summarizes blue printed fabric patterns, creating a dataset and utilizing the Stable Diffusion AI drawing software for LoRA model training. The generated patterns blend traditional styles with innovative elements and are applied to modern home design, showcasing the contemporary relevance of intangible cultural heritage. By combining traditional craftsmanship with generative AI, this study not only generates new patterns but also demonstrates AI’s potential in art and design, advancing the integration of traditional culture with modern technology and enhancing the vitality and dissemination of intangible cultural heritage.