As a new economic form, the digital economy provides new opportunities to save energy and reduce emissions, but it may also become a booster for increasing energy consumption and pollutant emissions, making the sustainable development of cities face serious challenges. It is controversial whether the digital economy contributes to energy saving and emission reduction, and it is unclear what role technological progress and structural transformation play in the relationship between the digital economy and energy saving and emission reduction. In this study, the energy saving and emission reduction effects of the digital economy in cities and its mechanisms are empirically examined from the perspective of technological progress and structural transformation using the two-way fixed effect model and the mediating effect model. The results show that the digital economy increases urban energy consumption and reduces pollution emissions. The energy saving and emission reduction effects of the digital economy are more significant in northeastern cities, large cities, and resource-based cities. The mechanism test shows that the digital economy promotes urban energy saving and emission reduction through green technological progress, mainly because the energy saving from green technological efficiency improvements exceeds the energy rebound from green technological innovation. However, the digital economy has not shown energy saving and emission reduction effects by promoting industrial structural transformation. Specifically, the structural transformation of the secondary industry contributes to urban emission reduction, while the structural transformation of the primary and tertiary industries leads to efficiency loss of energy saving and emission reduction. Our findings provide valuable insights into the synergistic governance of "energy saving" and "emissions reduction" in cities in the digital economy.