Abstract: Based on panel data from 41 cities in the Yangtze River Delta region from 2017 to 2021, this study uses entropy weight TOPSIS method to assign weights to 12 indicators of fiscal sustainability, calculates the local fiscal sustainability index, and employs a two-way fixed effects model to empirically study the correlation between digital economic development and local fiscal sustainability. The results show that there is a significant positive correlation between digital economic development and local fiscal sustainability in the Yangtze River Delta region. Through heterogeneity analysis, it is found that cities with different levels of digital economic development have different effects on improving fiscal sustainability; the higher the level of digital economic development, the more obvious the effect on improving fiscal sustainability. Therefore, local governments should pay more attention to and invest in the digital economy, and formulate scientific and reasonable plans according to the local level of digital economic development to avoid waste of resources.