As the organizational form of factors and economic activities in space, the rationality of urban spatial structure is closely related to the effective organization, allocation, and utilization of various innovation factors in cities, and therefore, it inevitably has a profound impact on firm innovation behavior. This article calculates the spatial structure of various cities in China using geographic information and floor area ratio data from the China Land Market Website for each land transaction. Furthermore, it explores the impact of urban spatial structure on firm innovation. The results show that urban spatial structure optimization can promote firm innovation through the effects of economies of scale and spatial technology spillovers. These results remain robust even after considering sample outliers, transforming index measurement methods, and controlling for endogeneity issues. Further research reveals that changes in urban spatial structure resulting from the spatial allocation of commercial and residential land contribute to promoting firm innovation. In contrast, changes caused by the allocation of industrial and public land do not significantly affect firm innovation. Excessive intervention by local governments due to competitive growth weakens the innovation effect of optimizing urban spatial structure. The optimization of both monocentric and polycentric urban spatial structures contributes to advancing firm innovation.