The digital revolution, characterized by the rise of the Internet-based economy, has emerged as a transformative force in regional economic development. This study presents a comprehensive empirical investigation into the evolution of Liaoning Province’s digital economy over a twenty-year period (2001–2020). Employing a robust factor analysis methodology, the research constructs a multidimensional index system encompassing four primary dimensions: digital infrastructure, industrial digitization, digital innovation capacity, and digital governance. The analysis integrates longitudinal data from provincial statistical yearbooks, supplemented with national economic indicators and industry-specific metrics from 2019. The empirical results reveal three key findings: First, Liaoning Province’s digital economy has experienced a compound annual growth rate of 15.3%, significantly outpacing traditional economic sectors. Second, the decomposition of growth drivers indicates that digital infrastructure investment and industrial digitization have been the primary contributors, accounting for 47% and 36% of total digital economic growth, respectively. Third, spatial econometric analysis demonstrates a positive spillover effect, with digital economy development contributing to a 0.78% annual increase in regional GDP growth. Based on these findings, the study proposes a strategic framework for optimizing the digital economy’s potential, including (1) enhancing digital infrastructure connectivity, (2) fostering digital-industrial integration in traditional manufacturing sectors, and (3) cultivating digital innovation ecosystems. The research contributes to the growing body of literature on regional digital economy development by providing empirical evidence from China’s northeastern industrial base, offering valuable insights for policymakers and stakeholders in similar regional contexts.