Currently, manufacturing enterprises in China are facing significant challenges due to overcapacity. Digital technological innovation is regarded as a critical driver for improving enterprise capacity utilization rates. Based on capacity utilization data for China A-share listed manufacturing firms from 2013 to 2023, digital technology patents were used to measure digital technological innovation to examine its impact on manufacturing firms' capacity utilization rate and transmission channels. The empirical results indicate that digital technological innovation, measured by the number of key digital technology patents, has a statistically significant and positive effect on enhancing enterprise capacity utilization rates. Mechanism analysis demonstrates that digital technological innovation primarily improves capacity utilization through decreasing corporate over-investment and reducing supply chain coordination costs. Heterogeneity analysis further reveals that the positive impact of digital technological innovation on enterprise capacity utilization is more pronounced in firms characterized by greater data resource endowments, higher industry technological dynamism, lower regional economic development levels and weaker market environments. The conclusions not only contribute theoretical support and practical implications for addressing overcapacity in the manufacturing sector but also provide meaningful insights into how digital technologies can facilitate the high-quality development of the real economy.