Abstract: In the era of the digital economy, digital transformation has become an important path for small and medium-sized enterprises (SMEs) to achieve innovation. Based on the dynamic capabilities theory, this paper investigated the interactive effects among the digital transformation of SMEs, dynamic capabilities, and innovation performance, as well as the moderating effect of environmental uncertainty. The empirical study results from 12 984 observational samples indicate that digital transformation can significantly positively affect the innovation performance of SMEs; digital transformation has a significant promotional effect on dynamic capabilities; in this process, the impact effect from strong to weak is in turn innovation capability, absorption capability, and adaptive capability. Environmental uncertainty plays a significant moderating role between dynamic capabilities and the innovation performance of SMEs. The heterogeneity analysis shows that digital transformation has a stronger promoting effect on innovation performance of state-owned enterprises, high-tech enterprises, manufacturing enterprises, and medium-sized enterprises.