Advancing new-type urbanization poses a significant challenge to the rational regulation of local government debt and the effective prevention of financial risks, which has emerged as a core topic in fiscal stability and financial security. This paper selects the 195 Chinese prefecture-level cities panel data over the period 2011-2020, and a multi-period DID model is utilized to analyze the link between new-type urbanization and local government debt scale. We obverse that new-type urbanization can increase the logarithm of local government debt. The expansion effect still holds following several robustness tests. In the mechanism analysis, new-type urbanization can increase the logarithm of local government debt through the effects of technological innovation and foreign direct investment from the financing demand dimension. Further analysis from the financing cost dimension reveals that digital financial inclusion will strengthen the positive effect of new-type urbanization on the logarithm of local government debt. […]