In the purview of the strategic directives encapsulated within the “Five Major Articles” pertaining to financial policy, the present study employs a provincial panel dataset from China, encompassing the period from 2011 to 2022, to dissect the intrinsic mechanisms by which digital inclusive finance impinges upon the urban-rural income disparity. Utilizing a bidirectional fixed-effects model, this research endeavors to elucidate the underlying dynamics. The findings of this inquiry suggest that the advent of digital inclusive finance is instrumental in mitigating the chasm between urban and rural income levels, with each of the three constituent dimensions exerting a discernible influence. A profound examination of the mechanisms at play unveils that carbon emissions and the stringency of environmental regulations exert a positive moderating influence on the capacity of digital inclusive finance to ameliorate the urban-rural income divide. Further heterogeneity analysis within the study delineates that the efficacy of digital inclusive finance in narrowing the income gap is more pronounced in regions characterized by robust economic development and a significant proportion of the population in the advanced stages of the life cycle. This underscores the regional specificity and contextual nuances that must be considered when evaluating the broader impact of digital financial inclusion strategies.