This study investigates the impact of SMEs and ICT on sustainable development in China from 1998 to 2020, using the ARDL model for empirical analysis. The findings indicate that SMEs and ICT have significant and positive short and long-run effects on sustainable development. Specifically, SMEs contribute to sustainable development by reducing their environmental footprint and promoting social responsibility. ICT enhances sustainable development through improved resource utilization, waste reduction, and access to education and healthcare. Institutional quality and R&D control variables also positively impact sustainable development, with R&D being significant in the short run. The study suggests that digitalization and SMEs development can help China mitigate climate change and achieve environmental sustainability. Policy recommendations include facilitating SMEs' transition to eco-friendly practices, removing financial and institutional barriers, and promoting digital literacy and infrastructure. The study highlights the importance of these factors in achieving sustainable development goals and provides a framework for policymakers to support digital transformation and environmental sustainability.This study investigates the impact of SMEs and ICT on sustainable development in China from 1998 to 2020, using the ARDL model for empirical analysis. The findings indicate that SMEs and ICT have significant and positive short and long-run effects on sustainable development. Specifically, SMEs contribute to sustainable development by reducing their environmental footprint and promoting social responsibility. ICT enhances sustainable development through improved resource utilization, waste reduction, and access to education and healthcare. Institutional quality and R&D control variables also positively impact sustainable development, with R&D being significant in the short run. The study suggests that digitalization and SMEs development can help China mitigate climate change and achieve environmental sustainability. Policy recommendations include facilitating SMEs' transition to eco-friendly practices, removing financial and institutional barriers, and promoting digital literacy and infrastructure. The study highlights the importance of these factors in achieving sustainable development goals and provides a framework for policymakers to support digital transformation and environmental sustainability.