The "streamlining administration, delegating powers, and improving services" reform is considered a crucial measure for easing the burden on enterprises, stimulating their innovation vitality, and promoting their development. However, research on its impact on the sustained innovation of enterprises is lacking in the academic community. The impact and internal mechanisms of the "streamlining administration, delegating powers, and improving services" reform on the sustained innovation of small and medium-sized enterprises were theoretically constructed and empirically tested using 441 domestic enterprises as subjects. The results demonstrate that the "streamlining administration, delegating powers, and improving services" reform and its three dimensions-streamlining administration and delegating powers, government regulation, and public services are positively influencing the resource assembly and sustained innovation of small and medium-sized enterprises. Among these, the promotion of public services to sustained innovation is more significant, and the role of government regulation in promoting resource assembly is more pronounced. Resource assembly is found to partially mediate the relationship between the "streamlining administration, delegating powers, and improving services" reform and the sustained innovation of small and medium-sized enterprises. The mediating effect of exploratory resource assembly is more significant than that of exploitative resource assembly. Further analysis indicates that the effects of the "streamlining administration, delegating powers, and improving services" reform differ markedly among enterprises in various industries, years, and regions. Theoretical contributions and practical insights are condensed based on these findings.