According to the studies, government subsidies greatly speed the digital transformation of companies. Based on a 2461 observation sample including 761 A-share listed companies spanning 2019 to 2022, this result stands. Further research shows that research and development (R&D) abilities are essential mediator in this process, accounting for over 61.02% of the entire effect on digital transformation. This result implies that, in addition to directly promoting digital transformation, government subsidies help business R&D investment to improve technical innovation and optimize resource allocation, thereby increasing the efficacy of digital transformation. These results suggest that the government should create more focused subsidy policies based on the individual requirements of businesses and industry features, paying especially more attention to provide more fiscal incentives to help corporate R&D operations. This strategy will improve companies’ R&D capacity, encourage ongoing innovation throughout their digital transition, and eventually help the economy to be digitally upgraded and industries to flourish at high quality.