As a micro-level mechanism of the "dual circulation" strategy, the integration of domestic and foreign trade is an effective way to resolve external risks and expand domestic demand. Enterprise innovation plays a key role in the transformation and upgrading of the manufacturing industry and the high-quality development of the economy. However, the external factors that induce enterprise innovation still need to be further explored and verified. It is important to incorporate the integration of domestic and foreign trade into the analytical framework of enterprise innovation, and explore the mechanisms and potential moderating effects of the integration of domestic and foreign trade on enterprise innovation from both theoretical and empirical perspectives. The research findings show that the integration of domestic and foreign trade has a significant positive promotion effect on enterprise innovation. The integration of domestic and foreign trade can improve enterprise total factor productivity and ultimately improve enterprise innovation efficiency. The more competitive the industry is, the more significant the effect of the integration of domestic and foreign trade on enterprise innovation. The more diversified the demand market is, the more significant the effect of demand-induced innovation in the integration of domestic and foreign trade. The effect of the integration of domestic and foreign trade on enterprise innovation in the western region is higher than that in the middle and eastern regions. The effect of the integration of domestic and foreign trade on enterprise innovation in the high-tech manufacturing industry is higher than that in the middle and low-tech manufacturing industries. The effect of the integration of domestic and foreign trade on enterprise innovation in private-owned enterprises is higher than that in other types of enterprises. The research conclusions can provide theoretical support for the integration of domestic and foreign trade strategy and provide a reference for the innovative development of enterprises.