This article studies the innovation and application of smart supply chains in the context of the digital economy. By analyzing the definition, characteristics, and impact of the digital economy on economic structure, as well as the core elements of smart supply chains and their differences from traditional supply chains, this paper explores the fundamental theories of the digital economy and smart supply chains. On this basis, we focused on researching innovative application models of big data, Internet of Things technology, artificial intelligence, and machine learning in smart supply chains. By analyzing the application effects of smart supply chains in the digital economy, the actual effects of smart supply chains in cost control, efficiency improvement, risk management, and other aspects were revealed. Finally, the future development trends of smart supply chain are discussed, including the application prospects of emerging technologies such as wearable devices and blockchain technology, as well as the future development trends of smart supply chain in technology development, supply chain collaboration, and sustainable development. This study aims to provide theoretical basis and practical guidance for the innovation and development of smart supply chains in the digital economy.