Digital technology has changed the original product form, the way of new product production process, business model and organizational form, and even overturned the basic assumptions of many innovation theories. Embedding digital innovation ecosystem makes it possible for small and medium-sized manufacturing enterprises to create value from the production side in the industrial era to the demand side in the digital economy era. Through a typical vertical case analysis, this paper reveals the internal mechanism and process of digital innovation ecosystem enpowers the innovation of small and medium-sized manufacturing enterprises. The research results show that the embedding of digital innovation ecosystem has a significant positive impact on the innovation performance of small and medium-sized manufacturing enterprises, and value co-creation plays an intermediary role between digital innovation ecosystem and the innovation performance of small and medium-sized manufacturing enterprises. This paper puts forward the innovation theoretical framework of small and medium-sized manufacturing enterprises from the perspective of digital innovation ecosystem.