Abstract: Against the backdrop of increasingly networked economic development, supply chain networks have become a critical support for firms’ digital technology innovation. This study focuses on innovation incentive policies represented by government procurement, examining how such policies generate spillover effects through supply chain networks and, in turn, influence firms’ digital technology innovation activities. Grounded in production network theory and drawing on supplier–customer data of Chinese A-share listed companies from 2015 to 2023, a firm-level supply chain network is constructed. Using government procurement policy as an entry point, the study empirically investigates the spillover effects of such policies within supply chain networks on firms’ digital technology innovation. The findings reveal that: (1) policy spillovers from government procurement within supply chain networks significantly enhance digital technology innovation among higher-tier upstream firms; (2) government procurement stimulates digital technology innovation in upstream firms by driving demand expansion and knowledge spillovers along the supply chain, but the incentive effect is less evident for higher-tier downstream firms due to increased monopoly power; (3) the spillover effects are more pronounced for firms with sufficient financial resources, operating outside strategic emerging industries, and located in regions characterized by strong market competition, well-developed digital infrastructure, and robust intellectual property protection.These findings provide empirical evidence and policy implications for promoting the coordinated development of digital technology and industrial-supply chains, and for improving the implementation of demand-side innovation incentive policies.