Balancing economic development and environmental pollution is particularly important for the country to achieve sustainable development. The emergence of digital inclusive finance has brought new ideas to solve problems. Based on spatial econometric models and simultaneous equations, this article uses panel data from 285 cities in China from 2011 to 2021 to study the interactive relationships and spatial lag effects of digital inclusive finance, environmental pollution, and economic development. The findings indicated that digital inclusive finance significantly impacts economic growth and acts as a deterrent to environmental pollution. However, environmental pollution can hinder the development of digital inclusive finance. The relationship between environmental pollution and economic development aligns with the inverted U-shape of the Environmental Kuznets Curve. This research offers new insights for policymakers on how to use digital financial tools to promote sustainable national and regional development.